HONG KONG: Asian markets were mixed Tuesday amid growing confidence that US politicians will agree a deal to avert a fiscal cliff, while the euro held up despite France losing its top-notch credit rating.
The decision by Moody's to downgrade French debt staunched the single currency's rise, which had been stoked by hopes that eurozone leaders will agree to hand Greece its latest batch of bailout cash.
Tokyo, which has risen about five percent in the past three sessions, ended the day 0.12 percent lower owing to profit-taking and after the Bank of Japan held off any new monetary easing measures following a policy meeting.
The Nikkei shed 10.56 points to 9,142.64.
Sydney finished 0.56 percent, or 24.3 points, higher at 4,385.7 while Seoul was up 0.64 percent, or 12.08 points, to close at 1,890.18.
In afternoon trade Hong Kong was up 0.71 percent while Shanghai was down 0.24 percent.
Wall Street provided a strong lead as markets opened for the first time since Republicans and Democrats on Friday pledged to work on a budget that would avoid the fiscal cliff of tax hikes and spending cuts due on January 1 that would tip the economy into recession.
Global shares have tumbled in recent weeks on fears the two parties would not find a compromise but the comments from Congressional leaders have soothed fears.
The Dow climbed 1.65 percent, the S&P 500 jumped 1.99 percent and the Nasdaq surged 2.21 percent.
The rally was also boosted by figures showing that existing home sales rose 2.1 percent in October from September and home builder confidence improved for a seventh straight month in November.
However, European woes continue to nag. On Monday it was France in the spotlight after Moody's cut its gold-plated AAA credit grade by one notch to "Aa1" and maintained a negative outlook, meaning another downgrade was possible.
It cited the the country's "disproportionately large" exposure to the troubled countries on Europe's periphery. Fellow ratings agency Standard & Poor's made a similar move in January.
The euro, which has been enjoying a rally, suffered as a result. In early Tokyo trade it bought $1.2787 and 103.90 yen, compared with $1.2778 and $103.99 yen in New York late Monday.
The single currency had risen to $1.2816 and 104.25 yen shortly before Moody's made its announcement.
The dollar was trading at 81.25 yen in Tokyo, compared with 81.40 yen in New York.
The yen remains under pressure -- which has sent the Nikkei surging in recent days -- after the frontrunner to become Japan's next prime minister in December said he would embark on an aggressive monetary easing policy to help the economy.
In the early afternoon the central Bank of Japan said it would hold off any fresh monetary easing -- after two such moves in the past two months -- while it also warned the economy faced an uncertain future.
It also kept interest rates on hold.
Investors had been buying the euro on a likely agreement between regional finance ministers to hand Athens the latest installment of cash it needs to avoid bankruptcy.
They will try Tuesday to reach a framework agreement at a meeting on Greece and heal a split with the International Monetary Fund over a key debt reduction target.
"We are headed for an agreement, but a partial one," said a European diplomat who asked not to be named. Another source underscored the will to reach an agreement, but noted a finalised deal could take a few more days.
On oil markets prices eased. New York's main contract, light sweet crude for delivery in January, wad down 24 cents to $ 89.04 a barrel in the afternoon and Brent North Sea crude for January delivery fell 16 cents to $ 111.54.
Gold was at $1,733.80 by 0640 GMT compared with $1,723.10 late Monday.
In other markets:
-- Taipei rose 16.73 points, or 0.23 percent, to 7,145.77.
Smartphone maker HTC fell 3.08 percent to Tw$236.0 while chip giant TSMC was 0.44 percent higher at Tw$90.4.
-- Wellington climbed 0.77 percent, or 30.37 points, to 3,972.97.
Fletcher Building rose 3.7 percent rise to NZ$7.65 and Telecom was down 0.21 percent at NZ$2.38.
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