TOKYO Asian shares and other more risky assets fell back on Tuesday while the yen rose broadly after the HSBC "flash" PMI reading showed manufacturing growth in China slowed in April, underscoring market concerns about global growth prospects.
European stock markets were seen rising, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX would open up to 0.3 percent higher.
U.S. stock futures were down 0.2 percent to hint at a soft Wall Street open.
The preliminary or "flash" HSBC Purchasing Managers' Index for April fell to 50.5 in April from 51.6 in March. It was still stronger than February's reading of 50.4 but a contraction in new export orders pointed to fragile global demand.
The HSBC report was China's first economic indicator for the second quarter and followed weaker-than-expected growth in first-quarter gross domestic product reported earlier this month, which triggered a sharp market sell-off last week.
"No doubt the market was hoping for a PMI reading closer to 51.5 and while the 50.5 result today is not disastrous, it does reinforce market concerns about the state of growth in the Chinese economy at the moment," said Tim Waterer, senior trader at CMC Markets in Sydney.
"I am not surprised at the downward reaction by risk assets ... Because a lot of the market rally so far in 2013 has been premised on a strong Chinese economic recovery, this takes away some of that buying enthusiasm."
China's Ministry of Industry and Information Technology said in a separate briefing on Tuesday that companies have no strong desire to invest and face insufficient demand, noting China's economy faces unstable and uncertain factors at home and abroad.
Weaker-than-expected U.S. existing home sales data overnight added to worries over prospects for the U.S. economy, focusing even more scrutiny on China.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent, dragged lower by Chinese shares which appeared headed for their worst day in nearly a month and weighed on Hong Kong markets. Hong Kong shares slid 1.2 percent and Shanghai tumbled 2.2 percent.
"Today's data is a confirmation of a weak trend," said Hong Hao, chief strategist at Bank of Communication International Securities. "I won't be telling clients to take excessive risks. Markets are still adjusting to this slower reality."
Shares in Australia, which are highly sensitive to economic indicators from China, its largest trading partner, trimmed some gains after the HSBC report to rise 0.9 percent.
The Australian dollar hit a session low of $1.0221, a six-week low, from around $1.0248 before the data.
Japan's Nikkei stock average eased 0.2 percent, as investors took profits from Monday's nearly five-year highs.
The dollar fell 0.4 percent to 99.79 yen, having failed to top the key 100 yen mark on Monday despite hitting a high of 99.90 yen. The weak U.S. housing data weighed on the dollar but traders say the upcoming Bank of Japan meeting on Friday may provide another opportunity to clear that symbolic level.
"Personally, I feel that any dips in dollar/yen and the related crosses will be bought into," said a trader for a Japanese bank in Singapore. "There is no indication, at least at my end, of any significant move to buy the yen, except on profit-taking."
The BOJ's reflationary plans were accepted by the Group of 20 gatherings in Washington late last week. The dollar hit a four-year peak of 99.95 on April 11. Heavy option barriers lined up around 100 yen have blocked the dollar's smooth climb against the yen, but if and when the 100 level is broken, traders expect stop-loss buying to lift the dollar even higher.
The dollar firmed against the euro, which traded down 0.2 percent at $1.3047, weighed by comments by European Central Bank policymakers stressing falling inflation and poor growth prospects in the euro zone, which suggest the bank may be leaning towards a rate cut.
Gold recovered some ground after last week's tumble but more gold outflows from exchange-traded funds summed up investors' weakening confidence in the metal.
Spot gold was at $1,425.81 an ounce, moving away from a two-year low of $1,321.35 touched last week, but still some $50 below the closing level before the sell-off began.
London copper dropped 1 percent to $6,864 a tonne.
Brent crude futures turned lower, trading down 0.6 percent at $99.80 after rising for a third straight session on Monday. U.S. crude fell 0.7 percent to $88.59 a barrel.
(Additional reporting by Ian Chua in Sydney, Masayuki Kitano in Singapore and Clement Tan in Hong Kong; Editing by Eric Meijer)