Tokyo - Asian shares edged lower on Monday as investors saw further evidence of slowing global growth, while the bleaker economic outlook kept hopes alive that authorities around the world will embark on more stimulus measures.
European stocks were likely to inch higher, while a 0.3% drop in US stock futures signalled a weak Wall Street start. Financial spreadbetters called the main indexes in London, Paris and Frankfurt to open up 0.1%.
After dismal Chinese trade figures topped a deluge of weak data from several countries last week, Japan on Monday said its economy grew 0.3% in April-June from the first quarter, half as much as expected, and slowing from 1.3% growth in January-March as Europe's debt crisis weighed on export demand and consumer spending began to lose momentum.
Investors will be watching July US retail sales and consumer prices, along with the eurozone's second quarter gross domestic product reading on Tuesday, which is expected to contract. Fears were growing that the three-year eurozone debt crisis will push the German economy into recession in the second half of 2012.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1% after snapping a four-day rally on Friday. But its weekly gain of 2.5% was the largest since January, due to hopes of more vigorous policy action from the central banks of Europe and the United States.
Despite the weak GDP reading, Japan's Nikkei stock average was flat as traders focused instead on company earnings reports.
"People are taking some profits, cutting risk after the run up last week," said Jackson Wong, Tanrich Securities' vice-president for equity sales, with Hong Kong shares down 0.2%.
Australian shares rose 0.5%, pulled higher by a jump in its largest steelmaker Bluescope Steel's on plans to sell a huge chunk of its assets to Nippon Steel.
Sentiment has been underpinned this month by expectations the European Central Bank will start buying sovereign bonds to lower borrowing costs for Spain, and the Federal Reserve will expand its monetary easing. Authorities, however, have suggested no such steps were likely before September.
"Data across a variety of indicators and regions support our economists' call that the ECB has more easing to do and our call that the euro should continue to weaken against the USD," Barclays Capital said in a research note.
The euro inched up 0.1% to $1.2294 but capped after failing to sustain its rally to a one-month high of $1.2444 on Auust 6.
Oil recovered after falling on Friday on concerns about softening demand from China, with Brent rising 0.7% to $113.77 a barrel on renewed fears of supply disruptions in the Middle East and US crude up 0.5 percent to $93.36.
Corn eased from an all-time high of $8.49 per bushel hit early on Friday to trade around $8.07, weighed by profit taking and a US government survey reducing the outlook for both output and demand.
Gold outperformed other metals, with spot gold holding above its 100-day moving average which stood at $1 608.50 an ounce.
"Compared to other metals, gold has been firm, grinding higher, on mounting expectations for a further quantitative easing (by the Fed)," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo, noting that markets would be scrutinising the annual meeting of economists and central bankers in Jackson Hole, Wyoming, at the end of the month.
The strength of gold relative to platinum pushed the unusual spread between the much-scarcer platinum and gold to an all-time high above $228 an ounce. Spot gold added 0.3% to $1 623.45 an ounce. Copper was down 0.2% at $7 471.75 a tonne.
Uncertainty over the extent and timing of action by policymakers to address the eurozone debt crisis and deteriorating global growth persisted. But without fresh negative news, investors were likely to keep repositioning from the sharp sell-offs seen before the shaky optimism that emerged this month.
"There is a possibility that investors are adjusting positions as both bonds and stocks have rallied since June. There may be some money shifting from bonds to stocks, as investors adjust from recent stock selling," said Masafumi Yamamoto, chief FX strategist at Barclays in Tokyo.
A shift to stocks or the Australian dollar may have kept the dollar/yen in tight ranges, he added. The dollar was steady around ¥78.27.
Still, data from EPFR Global showed on Friday that investors pledged the most money to US bond funds in nearly three months in the latest week, suggesting wariness over tilting towards riskier assets.
European bond markets remained jittery, with borrowing costs in highly-indebted Spain pinned near critically high levels, putting upward pressure on Italian yields.
Finance Minister Vittorio Grilli said Italy's government would overshoot its 2012 deficit goal because of worse-than-expected growth but planned no extra budget cuts because Italy was on target to meet its EU obligations, a newspaper reported.
Asian credit markets weakened, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 3 basis points.