HONG KONG (Nikkei Markets) -- Asian shares outside of Japan declined Monday as investors assess the prospects of a broader trade agreement after the U.S. and China announced an interim deal.
The Nikkei Asia300 index fell 0.4% to 1,359.77.
After the U.S. and China announced an interim trade deal on Friday that involved cancellation of new U.S. tariffs on China in return for Beijing agreeing to increase agricultural purchases, analysts reflected what the limited deal meant in reaching a "phase two" or broad-based trade agreement.
ING Bank said negotiating a "phase-two deal" that is acceptable to both the sides on important matters like indirect China subsidies and the Asian nation's technological ambition "is very difficult because both the parties are poles apart on these issues."
BofA Global Research said that while the interim deal was better than its baseline expectations, investors should exercise caution before jumping to an overly optimistic conclusion. It specifically pointed to the challenging issue of purchases of technology products by China's Huawei Technologies.
Meanwhile, data released Monday showed that China's industrial production grew by 6.2% year-on-year in November, up from 4.7% in previous month and better than the 5% expansion expected by economists polled by Reuters. Retail sales grew by 8% compared with 7.2% in October and 7.6% forecast.
"The combination of a better-than-the-market-expected November reading and the announcement of a phase-one trade deal has strengthened our conviction of a modest mini-cycle growth recovery," Morgan Stanley said. It expects China's GDP growth to reach 6% in the first half of next year and 6.1% in the second half.
Among movers on the A300 on Monday, Air China added 0.3% after reporting that its number of passengers in November increased 3.2% from a year ago. Rivals China Eastern Airlines climbed 0.2% and China Southern Airlines advanced 1.7%.
Taiwan Semiconductor Manufacturing declined 0.9%, pulling back from record highs. Tencent Holdings slid 0.3%.
Sun Pharmaceutical Industries declined 0.8%. The Indian drugmaker said the U.S. drug regulator had issued eight observations following the inspection of a major manufacturing facility.
--Nimesh Vora
