Asian stocks sluggish after Wall Street gains

Both Tokyo and Sydney ended the day flat, with the Nikkei index slipping 6.99 points to 10,309.78 and Sydney's S&P/ASX 200 edging up 0.9 points to 4,767.8.

Hong Kong's Hang Seng was down 0.71 per cent by lunch, while Shanghai's Composite index was off by 0.23 per cent.

All four indexes were up from the start of the week, however, with Shanghai having jumped 2.88 per cent on Monday.

Wall Street climbed higher on Tuesday thanks to figures showing that November retail sales rose more than expected, as well as a decision by the Federal Reserve to maintain near-zero interest rates and a $600 billion asset purchase programme.

The Dow Jones Industrial Average rose 0.42 per cent to its highest level in 27 months, the broader S&P 500 index edged up 0.09 per cent and the tech-rich Nasdaq climbed 0.11 per cent.

While this gave a lift to Tokyo, traders also noted poor quarterly earnings from US electrical appliance retailer Best Buy, a bad sign for Japanese electronic goods makers.

Japan's Tankan quarterly survey of business confidence heightened investors' caution, as the index weakened for the first time in nearly two years due to the yen's strength, which hurts exporters, and general global uncertainty.

"It's a tug-of-war between the improvement in overseas conditions and the deterioration in Tankan business sentiment concerning the outlook," Okasan Securities strategist Hideyuki Ishiguro told Dow Jones Newswires.

The Tankan index for large manufacturers dropped from eight to five in September -- the first fall in seven quarters. Any figure above zero indicates some degree of optimism.

Elsewhere, Sydney trod water despite an announcement by the competition regulator that it would not obstruct an $8.3 billion merger between the Australian and Singapore stock exchanges to create the world's fifth biggest bourse.

Shares in the Australian Securities Exchange were unchanged as investors contemplated the long road ahead before the merger gets approval from an array of authorities involved in the process.

"There are still all the political issues facing the deal, which could mean it still gets tied up for a while...

"The Australian opposition are quite vocal and some of them seem to be using this as a platform to put on a show and basically raise their own profiles," an analyst at one local broker told Dow Jones.

Elsewhere, mainland China and Hong Kong stocks dipped, led by commodity stocks such as energy giant CNOOC and PetroChina due to a slightly lower oil price.

In Hong Kong, Cathay Pacific plunged 6.12 per cent after the company announced a slowdown in passenger growth in November to 8.7 per cent year-on-year from 14.1 per cent in October and 18.4 per cent in September, and following a downbeat forecast for the sector by industry body IATA.

Oil was lower in Asian trade ahead of a widely monitored US energy report.

New York's main contract, light sweet crude for January delivery, dropped 19 cents to $88.09 a barrel. Brent North Sea crude, also for January, eased 21 cents to $91.

The dollar rose against the yen and euro in Asia following the Federal Reserve's decision to maintain its asset purchase programme.

The dollar rose to 83.81 yen in Tokyo trade from 83.66 yen in New York late Tuesday.

The euro fell to $1.3347 from $1.3375 while edging down to 111.87 yen from 111.90 yen.

Gold opened at $1,395.30-1,396.30 an ounce in Hong Kong, down from Tuesday's close of $1,405.00-1,406.00.

In other markets:

-- Manila fell 1.40 per cent, or 58.28 points, to 4,089.75.

-- Wellington rose 0.27 per cent, or 8.97 points, to 3,297.92.

Telecom rose 1.9 per cent to 2.16 New Zealand dollars. Fletcher Building fell 1.3 per cent to 7.75 after launching a 740 million Australian dollar bid for Australia's Crane Group. Air New Zealand rose 1.4 per cent to 1.43.

-- Taipei rose 0.19 per cent, or 16.28 points, to 8,756.71.

Formosa Plastics climbed 1.91 per cent to 96.0 Taiwan dollars, while Taiwan Semiconductor Manufacturing rose 1.45 per cent to 70.0.

-- Seoul rose 0.42 per cent, or 8.43 points, to 2,017.48, supported by shipyard stocks after two firms won billion-dollar orders.