Asia: Markets mostly up but dealers cautious after latest gains

[HONG KONG] Asian equities edged up on Tuesday but traders took a breather after recent strong gains, with more records on Wall Street unable to spur buying, but the dollar built on the previous day's gains against the euro and pound.

While optimism over the global economy and corporate earings remains up - helping push global markets to all-time or multi-month highs - investors moved carefully as they await the next catalyst.

New York's three main indexes chalked up yet more fresh peaks on Monday thanks to a rally in banks and hopes that Donald Trump can still push through his economic agenda despite a series of setbacks for his legislative programme.

But in early Asian trade Hong Kong was 0.1 per cent lower after three days of gains, while Shanghai slipped 0.2 per cent with eyes turning to Thursday's release of Chinese economic growth data.

The readings will come a day after the country's leadership starts its twice-a-decade meeting of the Communist Party at which President Xi Jinping is set to be handed a second term, while changes to several key leadership positions in China's ruling party are expected.

Tokyo was flat by the break but sitting at 21-year highs.

However, Sydney was up 0.7 per cent on a bounce in commodity prices while Seoul and Singapore also gained slightly.

DOLLAR GAINS

On currency markets the dollar extended Monday's gains against the euro following comments from Federal Reserve boss Janet Yellen hinting at a further interest rate hike this year, while dealers fret over Spain's Catalonia crisis.

Madrid warned the region's separatist leader that he has only three days left to "return to legality" on Monday after he refused to say whether he would follow through on a threat to declare independence from Spain, one of the eurozone's biggest economies.

The greenback was also pushing up against the pound as Britain struggles to make headway in talks with the European Union on how to break away from the bloc.

The US unit has also been given support from talk that a known fiscal hawk is being considered a front-runner to take over Ms Yellen at the Fed when her term is up early next year.

Mr Trump is said to have been impressed with Stanford University economist John Taylor at an interview last week, fuelling speculation he is in prime position.

Oil prices were mixed after rallying on news that Iraqi forces had swept into Kirkuk province, seizing the governor's office, key military sites and an oil field following a controversial Kurdish independence referendum.

"News ... that conflict has broken out near the oil rich region around Kirkuk sent prices higher again and this has to increase the chances that Turkey - which has its own concerns about Kurdish independence - will turn off the tap on the Kurdish pipeline," said Greg McKenna, chief market strategist at AxiTrader.

AFP