China stocks may reverse Tuesday's gains

(RTTNews.com) - The China stock market headed back up into positive territory again on Tuesday, one session after it had written a finish to the two-day winning streak in which it had gathered more than 50 points or 2.1 percent. The Shanghai Composite settled just above the 2,290-point plateau, and now investors may see a mild retreat when the market kicks off trade on Wednesday.

The global forecast for the Asian markets is mixed with optimism from Europe tempered by soft housing data from the United States. Greek Prime Minister Lucas Papademos said that progress has been made in a debt-swap agreement with bondholders. However, a disappointing housing report showed a bigger than expected drop in U.S. home prices. The European markets finished slightly higher and the U.S. bourses were mixed but little changed - and the Asian markets are expected to follow suit.

The SCI finished slightly higher on Tuesday following gains from the resource stocks.

For the day, the index added 7.57 points or 0.33 percent to finish at 2,292.61 after trading between 2,277.06 and 2,296.38. The Shenzhen Composite Index was unchanged at 855.20 points.

Among the gainers, Anhui Hengyuan Coal Industry jumped 3.5 percent, while Henan Shenhuo Coal climbed 1.5 percent, China Shenhua Energy jumped 0.6 percent, Hebei Hengshui Laobaigan Liquor surged 8.5 percent, Jiangsu Yanghe Brewery spiked 2.6 percent and Luzhou Lao Jiao collected 2.5 percent.

Wall Street offers little clarity as stocks were lackluster on Tuesday after failing to sustain an early upward move. The choppy trading came as investors weighed optimism about the financial situation in Europe against a disappointing batch of U.S. economic data.

The early upward move came as traders reacted positively to the latest news out of Europe, including comments from Greek Prime Minister Lucas Papademos indicating that "significant progress" has been made in reaching a debt-swap agreement with bondholders.

Papademos said that his government wants to conclude negotiations with its private sector bondholders on a debt restructuring deal by the end of this week. The markets also benefited from news that most European Union leaders have agreed to sign a new fiscal compact designed to achieve tighter budgetary discipline.

However, a disappointing housing report released before the start of trading helped to limit the upside for the markets, with the report from Standard & Poor's showing a bigger than expected drop in U.S. home prices in November. The S&P/Case-Shiller 20-City Composite Home Price Index fell by 0.7 percent in November on a seasonally adjusted basis. Economists had been expecting the index to decrease by about 0.4 percent.

Stocks subsequently pulled back off their early highs following the release of weaker than expected readings on Chicago-area business activity and consumer confidence. The Institute for Supply Management - Chicago said its Chicago business barometer fell to 60.2 in January from 62.2 in December, although a reading above 50 indicates an expansion in regional business activity. The drop surprised economists, who had expected the index to edge up to a reading of 63.0.

Separately, the Conference Board said its consumer confidence index dropped to 61.1 in January from a revised 64.8 in December. Economists had expected the index to increase to 68.0 from the 64.5 originally reported for the previous month.

The major averages eventually ended the session mixed, although they were all nearly unchanged on the day. While the tech-heavy NASDAQ inched up 1.90 points or 0.1 percent to 2,813.84, the Dow fell 20.81 points 0.2 percent to 12,632.91 and the S&P 500 edged down 0.61 points or 0.1 percent to 1,312.40.

In economic news, China will on Wednesday reveal the results of its Purchasing Managers' Index for manufacturing in January, with analysts expecting the index to show a score of 49.6, down from 50.3 in December. China also will announce numbers for January's HSBC Manufacturing PMI; in December, it had a score of 48.7.