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[HONG KONG] Asia stocks retreated on Monday as tensions on the Korean peninsula weighed on sentiment, but data showing China's GDP growth was higher than expected in the first quarter was a positive sign for the world's second largest economy.
Tensions between Pyongyang and Washington have soared in recent weeks as a series of North Korean weapons tests have wrought ever-more bellicose warnings from US President Donald Trump's administration.
During a visit to the heavily militarised border between the two Koreas, Vice-President Mike Pence said America was ruling nothing out in its dealings with the hermit state, a day after Pyongyang failed in its attempt to test another missile.
Mr Trump last week ordered a naval strike group led by the USS Carl Vinson aircraft carrier to the region, though the vessels remain a long way from the peninsula.
Tokyo stocks led markets lower - extending four days of losses - as the growing tensions stoked demand for the safe-haven yen.
A stronger yen is generally bad for Japanese shares as it dents exporters' profitability.
"Geopolitical risk will continue to be closely monitored today as a strapping US Navy Armada moves within striking distance of North Korea," said Stephen Innes, senior trader at forex firm Oanda.
"With all the military adventurism in play, those insidious wartime market correlations take force as the risk-off theme grips markets.
"To what extent the markets need to price in geopolitical risk more actively into their psyche will likely drive nearer term sentiment."
The benchmark Nikkei 225 index, which closed at a 2017 low on Friday, lost another 0.3 per cent by the lunch break.
Taipei and Manila also fell 0.3 per cent, while Jakarta dropped 0.2 per cent and Singapore declined 0.8 per cent.
Hong Kong and Sydney were closed for a holiday.
China markets also declined despite government figures showing signs of stabilisation in the world's second largest economy.
Growth of 6.9 per cent for the first quarter of 2017 was better than the median analyst expectation of 6.8 per cent in an AFP poll.
"The national economy in the first quarter has maintained the momentum of steady and sound development," the National Bureau of Statistics said in a statement.
It added that "positive changes kept emerging and major indicators performed better than expected".
The economy grew 6.7 per cent in 2016, its slowest rate since 1990.
The government has trimmed its 2017 GDP growth target to "around 6.5 per cent" as the economy faces an array of challenges.
The Asian giant is a crucial driver of global growth but leaders are trying to reduce its reliance on exports and state-backed investment and instead focus on domestic consumer spending to drive expansion.
Monday data also showed China's industrial output growth rose to 7.6 per cent year-on-year in March, beating an estimate of 6.3 by Bloomberg News.
Retail spending grew a forecast-beating 10.9 per cent, while fixed-asset investment rose 9.2 per cent in the first three months of the year, representing a slight acceleration from February.
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