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Asia: Markets move cautiously after tepid US lead

[HONG KONG] South Korean traders sent shares rallying on Tuesday as they returned from a long weekend but their Asian counterparts moved cautiously following a soft lead from Wall Street.

Regional markets started the week on a positive note on Monday as investors looked past a surprise drop in US jobs and bought into other positives from Friday's jobs report that indicated the world's top economy is in rude health.

Unease over US-North Korea tensions also continue to drag on confidence with speculation that Kim Jong-Un's regime could launch another long-range missile to mark Tuesday's anniversary of the founding of the ruling party.

Still, Seoul's Kospi jumped two percent in early trade as it played catch-up with the rest of Asia, while Tokyo, which was also closed on Monday, was up 0.4 per cent by the break.

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Hong Kong dipped 0.1 per cent, extending the previous day's losses after hitting a 10-year high Friday, while Shanghai slipped 0.2 per cent. Sydney was flat and Singapore shed 0.3 per cent.

US markets all ended down in limited trade owing to the Columbus Day holiday, with the Nasdaq snapping streaks of nine straight gains and six straight records.

On currency markets the euro fought off uncertainty over Spain's separatist crisis and rose against the dollar following a forecast-beating reading on German industrial output, which boosted expectations the European Central Bank will begin to raise interest rates soon.

Added to that were comments from ECB governing council member - and noted hawk - Sabine Lautenschlager, who said the days of easy money should be at an end, including winding in its massive holdings of bonds.

The single currency was sitting in the high US$1.17 region on Tuesday, having struggled just above US$1.17 at the end of last week.

The pound was also slightly healthier though dealers remain wary as embattled British Prime Minister Theresa May's future looks uncertain after last week's gaffe-filled Conservative party conference speech.

Mrs May told parliament Monday she expected "leadership and flexibility" from her European Union counterpart in Brexit talks. But the European Commission hit back at her assertion it was up to Brussels to take the initiative, fanning uncertainty over the crucial negotiations.