Asian stocks down, China inflation weighs

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Tokyo was subdued ahead of the start of the earnings season next week and due to ongoing concerns over the economic impact of last month's devastating earthquake and tsunami.

Shanghai fell 0.42 per cent and Hong Kong lost 0.14 per cent as Beijing said the politically sensitive consumer price index rose 5.4 per cent in March -- the fastest pace since July 2008 -- and 5.0 per cent in the first quarter.

Economists had predicted March inflation at 5.3 per cent.

Both readings are well above Beijing's 2011 target of four percent. Prices rose 4.9 per cent in February.

The March reading -- the highest since July 2008 -- comes despite leaders' attempts to cool prices with four interest rate hikes since October as well as other measures such as raising the amount of money banks must hold in reserve.

The data was compounded by food prices soaring 11 per cent in the first quarter while housing costs rose 6.5 per cent.

"The market is concerned the central bank may launch new measures over the weekend, even though the (consumer price index) data is in line with expectations," said Wang Liemin, an analyst at Guosen Securities in Shanghai.

The sell-off came after earlier gains following National Bureau of Statistics data that also showed the economy continuing to expand robustly.

The NBS said gross domestic product expanded 9.7 per cent on year in the first three months of the year, beating an estimate of 9.5 per  cent in a Dow Jones Newswires poll.

But while the growth data shows the world's second biggest economy is in rude health, analysts warned that the growth was still too strong, despite easing from the previous quarter.

"The Chinese economy is not slowing as planned or desired. Inflation remains stubbornly high," said Alistair Thornton, an analyst at IHS Global Insight.

Tokyo fell 0.65 per cent, or 62.40 points, to 9,591.52, with attention turning to the beginning next week of the corporate earnings season, which will give an early indication of the economic effects of the March 11 quake-tsunami.

Traders were also keeping an eye on the continuing struggle at the crippled Fukushima Daiichi nuclear plant, where workers are still trying to stop radioactive leaks into the Pacific.

There are lingering worries over the impact of radioactive spills on marine life after the health ministry said caesium levels 25 times the legal limit had been detected in young sand lance caught off Fukushima prefecture.

Sydney finished 0.66 per cent, or 32.1 points, lower at 4,852.1 and Seoul closed flat, edging down 0.56 points to 2,140.50.

Asia was given a weak lead from Wall Street, where the Dow gained 0.12 per cent, the broader S&P 500 was flat and the tech-heavy Nasdaq edged down 0.05 per cent.

Traders digested news that new claims for US unemployment benefits rose unexpectedly, to 412,000 last week, an increase of 27,000 from the previous week.

That was above the 400,000 many economists believe signifies job growth.

The Labor Department said the jump was thanks to a cyclical trend that is normal towards the end of a quarter, but markets were only partly consoled by that reading.

Sentiment was also weighed by news that Internet giant Google's earnings came in slightly below expectations. The search engine fell 5.36 percent in after-hours trading.

On currency markets the yen was at 83.24 against the dollar, up from 83.64 late Thursday in New York, while it stood at 120.41 to the euro, up from 120.97 in New York Thursday.

The euro was trading at $1.4461 in morning Asian trade, down from $1.4486 in late US trade Thursday.

New York's main contract, light sweet crude for delivery in May, rose 15 cents to $108.26 a barrel and Brent North Sea crude for May gained 20 cents to $122.20 in the afternoon.

Gold opened at $1,476.50-$1,477.50 an ounce in Hong Kong, up from Thursday's close of $1,462.50-$1,463.50.

In other markets:

-- Taipei fell 0.96 per cent, or 84.61 points, to 8,718.12.

Hon Hai fell 3.23 per cent to Tw$105.0 while Taiwan Semiconductor Manufacturing Co was 0.86 per cent lower at Tw$69.2.

-- Manila gained 0.39 per cent, or 16.68 points, to 4,251.64.

Philippine Long Distance Telephone rose 0.43 per cent to 2,350 pesos, SM Investments added 0.36 per cent to 564 pesos and Lepanto Mining surged 11.32 per cent to 59 centavos.

-- Wellington ended flat, edging down 1.79 points to 3,452.69.

Tourism Holdings rose 16.7 per cent to NZ$0.70, Steel & Tube was down 2.6 per cent at NZ$2.66 and Fletcher Building lost 0.1 per cent to NZ$9.18.