TOKYO Asian shares fell on Tuesday as investors turned cautious after the new year's rallies, with corporate earnings season for the last quarter of 2012 looming and the European Central Bank's policy meeting due later in the week.
European shares were seen flat to modestly lower, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX uld open down by 0.1 percent. U.S. stock futures suggested a soft Wall Street start with a 0.1 percent drop.
The euro remained firm against the dollar on speculation the ECB might refrain from signalling more interest rate cuts when it meets on Thursday, helping to support copper and gold prices.
The dollar paused from its rapid and sharp rally against the yen after rising more than 10 percent in less than two months on speculation the new Japanese government will push for aggressive monetary easing to beat deflation.
U.S. stock prices retreated from five-year highs on Monday, spurring selling of oil, gold and other risky investments.
U.S. earnings season unofficially kicks off when aluminium maker Alcoa reports its results after Tuesday's market close.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent, as investors took profits from the new year rally which lifted the index more than 2 percent in the first week of 2013.
South Korean shares were among the underperformers with a 0.4 percent drop, despite Samsung Electronics (005930.KS), the world's top maker of memory chips and handsets, estimating its October-December operating profit at a record 8.8 trillion won.
Samsung's guidance, coming ahead of full quarterly results by January 25, was in line with forecasts. A technical glitch and a worrying outlook for corporate results cooled investment appetite.
"Overall, fourth-quarter earnings are likely to be bad, except for some tech firms. However, the economy is turning around, so this is likely to be the worst of it," Kim Young-joon, an analyst at SK Securities, said of Seoul shares.
The dollar was down 0.3 percent to 87.54, trimming earlier losses.
Japan's benchmark Nikkei stock average fell 0.6 percent, after snapping a five-session winning streak on Monday when a pause in the yen's weakness triggered profit-taking on exporters.
The euro inched up 0.1 percent to $1.3124.
"I expect position adjustments to continue ahead of key events such as the ECB meeting and earnings reports starting with Alcoa," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, adding the euro could still push higher to around $1.3150 ahead of the ECB meeting.
Saito said the dollar may face selling pressure against the yen, having scaled its highest since July 2010 at 88.48 on Friday, up about 7 percent over the past month. But he said support was seen firm at 86.50 yen.
ECB SPECULATION SPURS ACTIVITY
Australia's trade deficit in November widened to its largest since early 2008 as imports again outpaced exports, though a recent meteoric rise in the price of iron ore suggests the worst of the trade pain is over for the resource-rich nation.
China's annual economic growth may have quickened to 7.8 percent in the fourth quarter, a Reuters poll showed, snapping seven straight quarters of weaker expansion, but the recovery is likely to be tepid and the economy may need continued policy support. The data is due out on January 18.
Before the growth data, China will release its trade data on Thursday, which includes initial estimates for metals imports and exports.
A firmer euro and hopes for the Chinese data underpinned London copper prices, which firmed 0.1 percent to $8,080 a tonne, as China is the world's biggest copper consumer accounting for 40 percent of refined demand.
"It may be there is a sense that they (metals) have been oversold in the short term," said metals analyst Ivan Szpakowski at Credit Suisse in Singapore, adding that the euro's gains have also provided added support.
Spot gold also held on to small gains, up 0.1 percent at $1,647.76 an ounce, eyeing the ECB's policy meeting and underpinned by robust physical demand in Asia.
"If we hear anything from the ECB suggesting a worsening outlook for the region's economy or future rate cuts, it will weigh on the euro and consequently weigh on gold prices."
U.S. crude inched up 0.1 percent to $93.30 a barrel and Brent futures inched up 0.1 percent to $111.50.
A lack of clear market direction in risk assets from equities to commodities deterred action in Asian credit markets, keeping the spread on the iTraxx Asia ex-Japan investment-grade index barely changed from Monday.
(Additional reporting by Somang Yang in Seoul and Melanie Burton in Melbourne, Rujun Shen in Singapore; Editing by Eric Meijer)