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June 26, 2017

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Asian markets mixed, Spain fears remove early shine

HONG KONG/BANGKOK -- Asian markets were mixed Tuesday as early gains caused by better-than-expected manufacturing data from the United States were overshadowed by lingering concerns over Spain's debt woes.

But the U.S. figures, which followed minor improvements in Asian and European activity, boosted the dollar and euro against the yen, lifting Japanese stocks, while Sydney climbed after Australia's central bank cut interest rates.

Tokyo ended 0.12 percent lower, shedding 10.46 points to 8,786.05, Seoul closed flat, dipping 0.18 points to 1,996.03 and Sydney jumped 1.01 percent, or 44.4 points, to 4,433.0.

Hong Kong, Shanghai and Mumbai were closed for public holidays.

Traders took their lead from Wall Street, which ended broadly higher after the Institute for Supply Management said its Purchasing Managers Index (PMI) edged up to 51.5 last month from 49.6 in August — representing the first expansion after three months of contraction.

A reading above 50 indicates growth and anything below represents shrinkage.

On Monday China said its own PMI was at 49.8 in September, which while still negative represented a modest improvement on 49.2 in August. And a European PMI reading by a research firm came in at 46.1, up from 45.1.

CLSA equity strategist Nicholas Smith said that the figures appeared to show "that the general picture is for a turnaround in global markets."

At the close of trade on Wall Street Monday the Dow added 0.58 percent and the S&P 500 rose 0.27 percent while the Nasdaq was flat.

However, Europe continues to cast a pall as dealers await a decision from Spain on asking for a bailout to prop up its struggling economy.

Britain's FTSE 100 fell 0.3 percent to 5,806.11. Germany's DAX lost 0.1 percent to 7,320.24. France's CAC-40 shed 0.4 percent to 3,423.01.

Madrid unveiled a tough austerity budget last week that many expect to have been a precursor to a rescue request, but the country's prime minister has so far held off until he knows the full conditions that would be imposed.

Adding to concerns, ratings agency Moody's warned it might downgrade Spain's debt to junk status when it makes a decision on the country in the next few days.

In Sydney, shares extended their morning gains after the Reserve Bank of Australia (RBA) said it would cut interest rates 25 basis points to 3.25 percent, their lowest level since October 2009.

The bank said it was concerned about a slowdown in the global economy, and the decision sent the Australian dollar down against its U.S. counterpart.

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