Asia report: Shares lacklustre on weak China data, US stimulus worries

Asian shares were broadly flat on Friday after weak Chinese economic data and fears that US fiscal stimulus would be delayed weighed on sentiment.

South Korean stocks fell as authorities reported the largest number of new coronavirus cases since March. Shares were higher in Australia and Japan.

Chinese shares rose 0.18% as the country's National Bureau of Statistics reported a 1.1% year-on-year fall in July retail sales, against expectations of a 0.1% rise, after a 1.8% decline in June.

Retail sales have now fallen seven months in a row, denting hopes of a V-shaped recovery in the country when the pandemic originated.

Factory output was also weak, rising 4.8% compared with the year before, and below forecasts for a 5.1% rise.

"Retail sales growth in China hasn’t been the same since the country came out of lockdown at the end of February, though optimism over the July numbers had been increasing given recent positive data from the auto sector in July, as well as reports from the likes of Daimler, and Apple talking of some decent rebounds in their Chinese markets," said CMC Markets Michael Hewson.

He said Friday's negative reading was "somewhat of a surprise, and shows that the Chinese consumer still remains quite nervous about coming out of hibernation, with the last time we saw a positive reading being the end of last year, when we saw a gain of 8% for December".

Further equity gains were likely to be limited as investors watch negotiations over US economic stimulus, needed to get the economy moving. Traders were also sitting on the sidelines before a meeting between US and Chinese officials about their trade deal on Saturday.