Asian shares were mostly lower Tuesday as early cheer after Alcoa Inc.'s positive earnings report was dampened by losses in Chinese shares after Beijing reiterated its determination to rein in the red-hot property market.
Most major markets had narrowed early gains or turned negative, with Japan's Nikkei Stock Average down 0.2%, Australia's S&P/ASX 200 down 0.4%, South Korea's Kospi Composite off 0.1%.
China's Shanghai Composite index was down 1.8%, Hong Kong's Hang Seng index was off 0.1%, Taiwan's Taiex was 0.4% lower while India's Sensex was down 0.3%.
Dow Jones Industrial Average futures were down 14 points in screen trade.
Shares in China were trading sharply lower, dragging on the rest of the region after the government denied an unsourced report in the state-run Securities Times Monday that China had loosened some controls on mortgage lending in first-tier cities.
In response to the newspaper report, China's Ministry of Housing and Urban-Rural Development late Monday said it would strictly carry out differentiated mortgage policies to support reasonable housing consumption in households, while also resolutely curbing investment and speculative types of property purchases.
"It's too early to expect property tightening measures to turn around as the property prices didn't significantly decline," said Central China Securities analyst Zhang Gang, referring to June property price data Monday that showed prices logged their first monthly fall in 16 months.
"Our overall take from the June data is that the central government will stick to their existing tightening measures and investment in public housing could pick up quickly," said Bank of America-Merrill Lynch in a note.
Developers were leading the declines with China Vanke down 2.1% and Poly Real Estate Group down 2.8%.
Hong Kong-listed mainland developers were also selling off with China Overseas Land down 1.4%, China Resources Land down 2.0% and Shimao Property off 2.5%.
UOB KayHian said in a note to clients that although it believes policy risk from property sector tightening measures "has already peaked, we do not expect any relaxation to be announced by government level anytime soon."
In Tokyo, shipping stocks, which had led the market's gains earlier, were encountering some profit-taking. Nippon Yusen was up 0.6% at Y335, off its intraday high of Y342, hit after the Nikkei reported that the shipper will resume spending to increase its cargo fleet by 40 vessels over the next five years.
"It looks like the worst phase (of the global financial crisis) is behind (us), but the timing of their investment is slightly late" compared with rival Mitsui O.S.K. Lines, said Mitsuru Miyazaki, analyst at SMBC Friend Research Center. Mitsui O.S.K. Lines was down 0.3% at Y587, below its intraday high of Y603. Nissan Motor was off 2.1% after the auto maker said on Monday it will suspend operations at four of its five domestic plants for three days from Wednesday due to a delay in the delivery of engine parts from Hitachi. Earlier on Tuesday, Nissan also said the delay could affect its North American production.
In Sydney, Alumina was up 1.3%; it has a joint venture with Alcoa in Alcoa World Alumina and Chemicals, and was boosted by Alcoa's after-hours results and the hike in its global alumina demand forecasts.
Major banks were mixed, while BHP Billiton was down 2.2% and Rio Tinto shed 3.1% on the weakness in Wall Street's materials sector on Monday.
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