Asia: Stocks mixed despite optimism in China

Asian indices were mixed on Tuesday with Chinese and Japanese stocks mostly down after Monday's gains.

Japan's Nikkei 225 was down 1.05% as the Asian Review published on Monday a Bank of Japan working paper that suggested that bond-market liquidity is declining and that the BoJ’s government bond purchases are tightening the demand balance.

Deutsche Bank analysts noted: "Interestingly BoJ policymakers have already somewhat acknowledged the issue", when the minutes from the February board meeting said that "a few members pointed to the possibility that the recent rise in rates reflected a decline in market participants risk tolerance and deterioration in market functioning".

In economic data, housing starts in Japan improved in February to -3.1% year-on-year from a decline of 13% the month before. Forecasts expected a fall of 7.1%. The fall in vehicle production also improved from -5.3% from -9.7% in January.

Shanghai's main composite index also fell 1.02%, but Hong Kong's Hang Seng rose 0.18% driven by news that central bank governor Zhou Xiaochuan hinted at further economic stimulus measures over the weekend.

He said the country needs to be vigilant on inflation as its growth has slowed "a bit too sharply".

Meanwhile, Beijing also unveiled new measures to support the Chinese housing market, such as easing curbs on lending and tax policies in an effort to stop a downturn. In particular, second-time home buyers are now required to make a minimum down payment of 40%, down from the previous 60%.

"It is a sign that policy makers are becoming more anxious about the slowdown – and consequently a sign that they will start taking action to sort it out," Accendo Markets analysts said.

Copper futures increased 0.6% to $6,103.00 a tonne. IG analyst Chris Beauchamp said: “Copper is in demand thanks to Chinese stimulus talk, but any new efforts by the PBoC are unlikely to resemble the gargantuan efforts of old.”

Australia's ASX also gained 0.78% as mining and energy stocks recovered from Monday's losses, when bearish trends in the wider commodities market hit home. The Australian market was also helped by optimism of further economic stimulus in China.

In corporate news, mining group BHP Billiton gained 3.09% after Monday's losses, while rival Rio Tinto rose 2.47% after both companies expanded supply of iron ore.

Rio Tinto expects output to increase of 330m tonnes in 2015 from 295m in 2014. BHP has a target for 225m tons this year from 204m the year before.

At same time, BHP faces a strike from 800 of its workers who say the company owes them bonuses.

After falling by 6.77% the day before, Santos was up 1.7% on Tuesday.

Elsewhere in China, Central China Real Estate gained 4.8% after Beijing announced plans to bolster the housing market.