SYDNEY, Aug 8 — Asian share markets were mostly weaker today but the dollar strode higher as investors digested weaker Chinese trade data ahead of key inflation readings from China and the United States due later this week.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.7 per cent, after US stocks ended the previous session with mild gains. The index is down 2.9 per cent so far this month.

In early European trades, pan-region Euro Stoxx 50 futures were down 0.11 per cent at 4,352, German DAX futures were down 0.08 per cent at 15,998, and FTSE futures were down 0.13 per cent at 7,530.

US stock futures, the S&P 500 e-minis ESc1, were down 0.21 per cent at 4,528.3.

Data showed China’s imports contracted at 12.4 per cent in July, missing forecasts for a drop of 5 per cent, while exports fell 14.5 per cent, compared with a fall of 12.5 per cent tipped by economists.

The offshore yuan fell to a more than two-week low of 7.2334 per dollar, while its onshore counterpart similarly bottomed at an over two-week low of 7.2223 per dollar.

The Aussie weakened 0.38 per cent to US$0.6549 (RM3), while the kiwi slid 0.55 per cent to US$0.60735.

The dollar rose 0.46 per cent against the yen at 143.15. It is still some distance from its high this year of 145.07 hit on June 30.

The yield on benchmark 10-year Treasury notes rose to 4.0442 per cent compared with its US close of 4.078 per cent yesterday. The two-year yield, which rises with traders’ expectations of higher Federal Reserve fund rates, touched 4.7598 per cent compared with a US close of 4.758 per cent.

The European single currency was down 0.1 per cent on the day at US$1.1002 while the dollar index, which tracks the greenback against a basket of currencies of major trading partners, was up at 102.24.

Hong Kong’s Hang Seng Index started to recover some ground lost earlier in the day, but was still down 1.26 per cent after opening 1.73 per cent in the red.

Sentiment rebounded in China as the blue chip CSI300 index turned positive to be up 0.07 per cent after initially shedding 0.54 per cent.

Australian shares were up 0.15 per cent, while Japan’s Nikkei stock index .N225 rose 0.29 per cent after earlier trading up by nearly 0.8 per cent.

Global investors are keenly awaiting inflation readings from China on Wednesday and the US on Thursday, expecting them to show stark differences in price movement in the world’s two biggest economies.

US inflation likely accelerated slightly in July to an annual 3.3 per cent, while the core rate was likely unchanged at 4.8 per cent, according to a Reuters poll of economists. ANZ predicts China’s July consumer price index to come in at minus 0.4 per cent year-on-year.

"China inflation has been quite low but that is because economic growth has been slowing down and not met expectations,” said Wei Li, BNP Paribas Asset Management multi asset portfolio manager.

"Inflation should start to pick up when growth does and we expect that to happen in the second half.”

The prospect of economic stimulus from China’s central government to reinvigorate a soft economy is still being contemplated by investors. Minor measures to help property markets have been delivered in the past fortnight, but no broad stimulus has been outlined.

"While awaiting ominous signs of deflation, markets are torn between economic gloom and hopes of resounding stimulus that is set to re-ignite China’s growth,” Mizuho economists said.

"We are however unconvinced that Beijing’s stimulus efforts will achieve intended ‘lift-off’ for the still struggling economy.”

US crude ticked up 0.21 per cent to US$82.11 a barrel. Brent crude rose to US$85.46 per barrel.

Gold was slightly lower with the spot price XAU= at US$1934.1667 per ounce. — Reuters