The South Korean stock market rebounded after falling to a four-week low Monday, with the Kospi Composite up 1.0% in early trade, as investors breathed a sigh of relief Kim's death has thus far triggered no destabilizing political drama in North Korea.
Events in Europe, however, continued to keep many investors on the sidelines with demand hit by the threat of potential euro zone sovereign credit downgrades. European Central Bank President Mario Draghi's somber assessment of Europe's economy Monday, and his refusal to commit the ECB to embarking on a European version of quantitative easing kept sentiment in check.
"The ECB President's recent statements that the central bank does not have authority to increase its bond purchases leave investors feeling they have little choice other than to maintain a defensive stance at present," Sydney-based CMC Chief Market Analyst Ric Spooner said in a report.
"Concerns over North Korea's leadership succession and the resultant increase in geopolitical risk have unfortunately coincided with already elevated risk premiums and fragile investor sentiment due to the European situation," he added.
Japan's Nikkei Stock Average tacked on 0.6%, Australia's S&P/ASX 200 dropped 0.1% and New Zealand's NZX-50 was off 0.5%.
Dow Jones Industrial Average futures were 49 points higher in screen trade.
Some of the beaten-down cyclicals, including exporters, were picked up by investors though buying lacked conviction. In Seoul, bellwether Samsung Electronics added 0.3%, Hyundai Motor rose 0.4% and S-Oil advanced 1.0%. It was a mixed bag for exporters in Tokyo, with Sony off 0.7%, while Toyota rose 0.3% and Canon added 0.4%.
The Sydney market struggled to make headway after hitting three-week lows Monday, with resources stocks falling on weaker base metals prices. BHP Billiton lost 0.3%, Fortescue Metals dropped 1.8% and Newcrest Mining fell 2.9%.
The Reserve Bank of Australia, which had cut rates for the second time in as many months earlier in December, said in minutes from its latest meeting that there exists a "non-trivial" risk of a "very sharp contraction," in Europe, highlighting the fears in the region of a demand-crunch for Asian exporters.
The euro was steady as traders continued to keep a wary eye on developments in Europe. With the threat of possible sovereign ratings downgrades in the backdrop, the single currency was only partially helped by news Monday that euro zone finance ministers had agreed to provide the International Monetary Fund with EUR150 billion in new loans to prevent Europe's debt woes from turning into a full-blown financial crisis.
The euro was at $1.3005 against the U.S. dollar, from $1.2998 late Monday in New York, and at Y101.47 against the yen, from Y101.46. The dollar was fetching Y78.02, from Y78.03.
The Australian dollar edged up after the RBA minutes signaled the strength of the country's mining boom means there is no strong need to cut interest rates further. The currency was recently at US$0.9927, from US$0.9915 just ahead of the minutes.
January Nymex crude oil futures were up 42 cents at $94.30 per barrel on Globex, while spot gold was at $1,597.40 per troy ounce, up $3.50 from its New York settlement Monday.
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