Asia: Stocks fall as Chinese producer prices decline further

Asian stocks were on the red on Tuesday despite positive consumer inflation data from China.

China's Shanghai composite index fell 0.22% after the consumer price index (CPI) came better than expected at 1.4% year-on-year, compared to 0.8% in January and forecasts of 0.9%. The producer price index fell 4.8% year-on-year in February, against expectations of a 4.3% decrease.

The uptick in CPI inflation came after the People's Bank of China introduced more stimulus measures and the Lunar New Year holiday pushed up food and transport costs.

"Higher-than-expected February CPI inflation and export data are likely to alleviate the anxiety policy makers have about weak growth and risk of deflation," Goldman Sachs wrote.

"However, we still expect further loosening measures in the coming months as overall economic activity growth remains weak and CPI inflation is likely to ease again in March as the Chinese New Year distortion disappears."

Beijing also ordered a $160bn swap plan ease local governments' mounting interest repayment pressure, which was smaller than had been hoped by local media.

China's finance ministry confirmed the swap plan overnight, with economists estimating local government debts exceed $3trn.

Hong Kong's Hang Seng also fell 0.94% on Tuesday.

Japan's Nikkei 225 was down 0.67% mostly due to a report saying that Basel Committee could ask banks to boost capital if the US rises its interest rates sooner than previously expected.

The report dragged banking stocks down, with Mitsubishi UFJ Financial Group falling 3.21% and Mizuho Financial Group losing by 1.18%.

Other Japanese were also hurt, with Toshiba falling 0.23% and Sony 1.17% down.

However, the yen hit a 3-month low against the dollar at ¥121.65 at 10:32 GMT.

On a more positive note, Australia's ASX rose 0.05% as investors look at the positive lead from Wall Street.

This was despite a decrease in National Australia Bank's (NAB) business confidence from 3 to 0 in February.

Australia and New Zealand Banking Group rose 0.4% and the NAB gained 0.35%.