Asia stocks dip on Chinese data, Moody's move; Nikkei down 0.08%

Investing.com - Asian stocks traded lower on Tuesday after Chinese manufacturing data disappointed, while the Moody's ratings agency cut its outlook for the European Union.

Sentiment that negative data will spark stimulus measures likely in the U.S. and China sent stocks jumping back and forth into positive territory.

During Asian trading on Monday, Hong Kong's Hang Seng Index was down 0.19%, Australia's S&P/ASX200 was down 0.38%, while Japan’s Nikkei 225 Index was down 0.08%.

Earlier, Moody's announced it was maintaining the European Union's Aaa rating but cut its outlook to negative, which suggests downgrades are possible.

The news sent stocks dipping in Asia on fears the key European export market may be facing building headwinds.

Meanwhile  in the U.S., Fed Chairman Ben Bernanke said in a widely anticipated speech last week that the U.S. central bank remains ready to intervene with stimulus measures should an already tepid recovery fail to show sustained improvement, especially in the labor market.

Investors interpreted the news to mean the Fed is growing increasingly willing to roll out a third round of quantitative easing, which sees the U.S. central bank buying bonds held by financial institutions, pumping liquidity into the economy in the process with the aim of pushing down borrowing costs and encouraging investing and hiring.

Under quantitative easing, the dollar weakens, while stocks strengthen.

The U.S. will release its August jobs report on Friday, and equities investors bought and sold on concerns that weak numbers will prompt the Fed to announce plans to intervene at its next monetary policy meeting on Sept. 11-12.

The U.S. economy added a net 163,000 jobs in July, 64,000 jobs in June and 87,000 in May, according to the Bureau of Labor Statistics, which many investors feel does not represent the sustained recovery in the labor market that Fed officials would like to see.

Meanwhile, investors continued to expect the European Central Bank to announce plans to buy sovereign debt in countries such as Italy and Spain.

ECB President Mario Draghi told European lawmakers earlier he felt comfortable buying bonds carrying three-year maturities.

Soft European manufacturing data, however, helped fuel selling as well.

Revised data released earlier revealed the eurozone’s manufacturing sector contracted for the 13th consecutive month in August.

The Markit research firm reported earlier the eurozone's manufacturing purchasing managers’ index rose to 45.1 from July's 37-month low of 44 but fell short of analysts' calls for a 45.3 reading.

The reading came in well below the 50 mark that separates growth from contraction.

Markit also reported that Germany's manufacturing purchasing managers' index hit 44.7, below analysts' calls for a 45.1 reading.

Elsewhere, the Australian Bureau of Statistics on Monday reported that retail sales contracted 0.8% in July following a 1.2% increase in June, whose figure was revised up from 1.0%.

Analysts had expected Australian retail sales to rise 0.2%.

The news fueled sentiments the Australian economy may be facing headwinds from abroad, especially in China, where once red-hot growth continues to cool.

The Chinese HSBC Manufacturing PMI disappointed investors this week, hitting 47.6 in August, a tenth successive month-on-month deterioration in Chinese manufacturing operating conditions and the lowest reading since March 2009.

Chinese authorities have said they cannot rule out plan to loosen monetary policy prior to the PMI's release.

Meanwhile, Japan’s average cash earnings fell more than expected in the last quarter, the government reported Tuesday.

Japanese Ministry of Health, Labour and Welfare said Japan’s average cash earnings fell to a seasonally adjusted -1.2%, from -0.4% in the preceding quarter whose figure was revised up from -0.6%.

Analysts had expected the figure to fall -0.3% in the last quarter.

In Hong Kong, top decliners included Li & Fung, down 2.52%, CITIC Pacific, down 2.35%, and China Petroleum and Chemical Coporation, down 1.51%.

In Australia, top decliners included NRW Holdings, down 8.26%, Boart Longyear, down 8.07%, and art Energy, down 6.98%.

European stock futures indicated a mixed to higher opening.

France's CAC 40 futures pointed to a gain of 0.03%, while Germany's DAX 30 futures pointed to a gain of 0.20%. Meanwhile in the U.K., FTSE 100 futures indicated a loss of 0.03%.

Dow Jones Industrial Average futures were up 0.19% while the S&P 500 futures were up 0.21%.