(Recasts, adds Huawei reports, updates prices throughout)
* Asian stock markets: tmsnrt.rs/2zpUAr4
* Nikkei drifts lower, China shares subdued
* Beijing injects masses of cash into financial system
* Huawei subject of U.S., German displeasure
* Pound supported as May wins confidence vote
By Wayne Cole
SYDNEY, Jan 17 (Reuters) - Asian share markets faltered on Thursday as unease over China’s economic outlook eroded early gains, though an anti-climactic end to the latest chapter in the Brexit saga did offer sterling a moment’s peace. MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.1 percent in thin trade, while E-Mini futures for the S&P 500 slipped 0.3 percent.
Japan’s Nikkei reversed course and dropped 0.3 percent.
China’s blue chip index eased 0.3 percent, led by a fall in the country’s second largest home appliances maker, Gree Electric, after it warned of slower profit growth as the economy loses steam.
Dealers could find no single spark for the mood shift, but noted China’s central bank had injected record amounts of money - around 1.14 trillion yuan ($168.74 billion) - into the financial system this week, stirring concerns about the risk of a cash crunch.
Adding to the caution was news that a bipartisan group of U.S. lawmakers introduced bills on Wednesday that would ban the sale of U.S. chips or other components to Huawei Technologies Co Ltd or other Chinese telecommunications companies that violate U.S. sanctions or export control laws.
That came shortly before the Wall Street Journal reported federal prosecutors were investigating allegations that Huawei stole trade secrets from U.S. businesses.
Such moves could inflame tensions between Beijing and Washington and make a trade deal yet harder.
Separately, Handelsblatt reported the German government is actively considering stricter security requirements and other ways to exclude Huawei from a buildout of fifth-generation (5G) mobile networks.
Also lurking in the background were worries the U.S. government shutdown was starting to take a toll on its economy.
White House economic adviser Kevin Hassett said the shutdown would shave 0.13 percent off quarterly economic growth for each week it goes on.
As expected, British Prime Minister Theresa May narrowly won a confidence vote overnight and invited other party leaders for talks to try to break the impasse on a Brexit divorce deal.
An outline for Plan ‘B’ is due by Monday and the market assumes there will have to be an extension of the Article 50 exit date past March 29.
“Nothing has happened in the last 24 hours to dissuade us from the view that we are headed in the direction of an Article 50 delay, a softer Brexit or no Brexit,” said Ray Attrill, head of FX strategy at NAB.
“But it remains too soon to be buying sterling with your ears pinned back,” he added, noting many uncertainties remained.
All of which left the pound firm at $1.2887, though still short of Monday’s peak at $1.2929. It fared well on the euro, which hit a seven-week low before steadying at 88.45 pence .
The U.S. dollar was otherwise mixed, easing a touch on the yen to 108.88, but firming on the euro to $1.1395. The dollar index was all but flat at 96.067.
In commodity markets, palladium hit record highs thanks to increasing demand and lower supply of the metal used in auto catalysts. Spot gold rose 0.1 percent to $1,294.91 per ounce.
Oil prices eased as traders worried about the strength of demand in the United States after gasoline stockpiles there grew last week by far more than analysts had expected.
U.S. crude futures fell 39 cents to $51.92 per barrel, while Brent slipped 40 cents to $60.92. ($1 = 6.7560 Chinese yuan renminbi)
Editing by Jacqueline Wong & Kim Coghill