UPDATE: Asian Shares Mixed; Little Impact From Chinese Data

SINGAPORE -- Asian stock markets were mixed in choppy trading Tuesday, with investors largely shrugging off fresh data from China while awaiting the results of the FOMC meeting in the U.S. Rio Tinto was lower again as its China-related troubles rumbled on.

"The prime worry of investors is when and how Beijing will soak up the liquidity that's been allowed to flush into markets, and today's data give no clue on that," says Guotai Junan analyst Xu Yinhui.

Markets were moving in a narrow range after Wall Street pulled back slightly from the 2009 highs hit Friday. The Dow Jones Industrial Average and the broader S&P 500 both fell 0.3% Monday. Dow futures were recently down 10 points in screen trade.

China's price data were in line with expectations with the consumer price index in July down 1.8% from the year before, but industrial output and urban fixed-asset investment growth in July were both weaker than expected, and likely to bolster the case for Beijing to continue expansionary policies.

In July, China's industrial production rose 10.8% on year, below expectations for an 11.5% rise, while January-July FAI grew 32.9% on year, down a bit from the first-half's 33.6% rise and below expectations for a 34.0% rise.

"I don't think it's a big deal if Chinese industrial production (growth) is slightly below consensus, when it's running above 10%," said UBS head of Sydney sales George Kanaan.

Japan's Nikkei 225 was up 0.2%, Australia's S&P/ASX 200 was down 0.1%, South Korea's Kospi Composite was up 0.1% while New Zealand's NZX-50 was 0.6% lower. Hong Kong's Hang Seng Index added 0.3%, while China's Shanghai Composite was up 0.3%. Singapore's Straits Times Index added 1.5%.

Players were also looking to the U.S. where the Fed begins its two-day rate setting meeting later.

"The focus will be on what the Fed says, and what the Fed says could be particularly important given that the OIS-Libor spread and Fed funds futures strip is pricing in a Fed hike for the first quarter next year," said Brown Brothers Harriman in a note.

Bucking the regional trend, the Tokyo market was supported by insurers as Mitsui Sumitomo Insurance Group Holdings rose 2.0% after saying late Monday that its April-June group net profit rose 37% thanks to sharp gains from derivative trading. Other insurers were also higher with Tokio Marine up 1.4%.

But Tachibana Securities analyst Kenichi Hirano warned that with the index rising a sharp 16% since July 13, a correction "could start any minute, but buying by foreigners is preventing it."

In Australia, mining giant Rio Tinto shares were down 2.1% on fears for its relationship with China, its biggest iron ore customer, despite comments from Australia's Foreign Minister Stephen Smith Tuesday that allegations on a Chinese website that Rio executives had cost the country more than US$100 billion by stealing state secrets weren't Beijing's official view.

The allegations came in an essay posted on a website called China Secrecy On-Line, written by an official with the local bureau for the protection of state secrets in east China's Jiangsu province. "It is now quite clear given that the article has been taken off the website, that it was essentially the opinion of the individual writer and not, if you like, officially sanctioned," Smith said.

Some of Rio's mining peers were also lower. BHP Billiton was down 1.8% and Equinox Minerals had lost 0.7%.

Korean stocks were choppy in light volume. The Bank of Korea left interest rates on hold as expected, and Governor Lee Seongtae said: "If the central bank has to make a next move, it's clearly up, but the current policy will remain intact for the time being."

KB Financial was down 1.1% but small-cap Industrial Bank of Korea gained 4.4% on heavy foreign buying.

Taiwan's Taiex was down 0.4%, amid concerns that Typhoon Morakot would hurt the domestic economy. Food and agricultural plays lost ground as the storm caused large agricultural and livestock losses. Uni-President Enterprises shed 4.2%.

Bucking much of the region, Singapore's shares advanced, playing catch up to gains in Asian markets Monday, when the market was closed.

Malaysia's KLCI traded down 0.1%, Indonesia's shares were flat, while in the Philippines, shares rose 0.5%.

In foreign exchange markets the euro was buying $1.4142, flat from late in New York trade, and Y136.75 from Y137.32. The dollar was at Y96.67 from Y97.11.

Japanese government bonds were stronger, though in a quiet market, after U.S. Treasurys gained Monday and equities slipped. The lead September futures contract was up 0.09 at 137.32 points. The 10-year cash JGB yield fell 1 bp to 1.445%.

LME three-month copper was at $6,120 per ton, down $15 from the afternoon kerb. Aluminum was at $1,976 per ton, up $7 from the kerb.

Standard Bank turned bullish on base metals in the third quarter, expecting price strength to continue, switching from its previous stance of expecting prices to stagnate or even pull back on China-related factors including a demand-growth slowdown and the aggressive second-quarter restocking. "This is due to investor money flows into commodities remaining robust and a growing number of signals that the global economy is on the road to recovery and that the downturn in metals demand is past its worst," the bank said.

Spot gold was at $946.05 per troy ounce, down 55 cents on the New York close.

Crude oil futures extended by just a tad Monday's fall in New York as the dollar rose against the euro and equities fell. Nymex light, sweet crude for September delivery was at $70.59 per barrel, down 1 cent after settling at $70.60 per barrel Monday.