Asia report: Markets fail to live up to leap day

Shares in China dropped sharply, as the People's Bank guided renminbi to its weakest peg in three weeks. The Shanghai Composite closed 2.86% down at 2,687.98.

The tech-heavy Shenzhen Composite was down 5.37%, and the Nasdaq-style ChiNext plummeted almost 7%.

Those losses came barely a day after Chinese officials worked to quash global concerns about the country's flagging economy at a G20 meeting in Shanghai.

China's central bank guided the onshore yuan to CNY 6.5490 per US dollar on Monday - the weakest level since 5 February. The currency is permitted to trade 2% either side of its loose peg, and had now lost almost 1% against the greenback since mid-February.

Monday's peg marked the fifth straight daily weakening of renminbi from Beijing, and came despite People's Bank chief Zhou Xiaochuan assuring G20 leaders at the weekend there was no basis for a persistent depreciation in the currency.

"It's likely that some capital has fled the stock market and flowed into the housing market", said Soochow Securities analyst Deng Wenyuan.

Shanghai's losses on Monday also came at the same time as China's outstanding margin loans slumped to their lowest levels in over a year.

The loans - which investors borrow from brokers to buy stocks - stood at CNY 869.7bn on 26 February. Wind Information data showed that was the lowest level since 4 December 2014.

In Japan, the Nikkei 225 finished February with a daily loss of 1% to 16,026.76. February was its third straight month in the red, with the monthly loss put at 8.5%.

The month was marked by investors scrambling for the safe haven of the yen, with the strengthening currency hurting the country's exporters.

Hong Kong's Hang Seng Index finished Monday down 1.3%, Seoul's Kospi was 0.18% in the red, and Sydney's S&P/ASX 200 gained 0.2%.

Analysts and traders in Australia were looking ahead to the Reserve Bank meeting on Tuesday, where the central bank was expected to leave the cash rate at 2%, where it had been held since 6 May 2015.

There were also warnings of a 'mad March' for the Australian dollar, with the European Central Bank meeting on 10 March, followed by the Bank of Japan, the US Federal Reserve and the Bank of England on 15 March, 16 March and 17 March consecutively, expected to force the currency higher.

"The Aussie dollar's hardly moved at all. [It] may end up being the winner at this stage," said Commonwealth Bank currency strategist Joseph Capurso, though he warned it would be at the cost of pressure being applied to Australia long-term.

Further east, Wellington's S&P/NZX 50 rose by 0.1%. Orion Health continued its rally, gaining 5.9%, after a deal announced with Nasdaq-listed Cognizant Group on Friday had the potential to triple the number of patients its Amadeus platform reached.

Oil was mixed in Asian trading as the focus was taken off the volatile commodity, thanks to China. Brent crude was last up 0.93% to $35.43 per barrel, while West Taxas Intermediate was down 0.12% to $32.74.

In currencies, the yen kept creeping towards the US dollar, rallying off its reputation as a safe haven. It was last 0.92% stronger, at KPY 112.95 per USD.

The Aussie also strengthened ahead of the Reserve Bank decision, and was last ahead 0.42% to AUD 1.3969 per dollar.

New Zealand's dollar slipped back 0.34% to NZD 1.5138 against the USD, as business optimism data from ANZ Bank showed a net 7.1% of firms in the country were optimistic about the general economic outlook in the year ahead, a sharp drop from the new 23% in January.