China caution, U.S. data subdue world stocks

Caution about China's economic prospects and upcoming U.S. economic data kept Asian stock markets subdued Tuesday. European markets were also lackluster.

Investors are awaiting economic events in the U.S. with Federal Reserve minutes due Wednesday and a monthly jobs report on Friday.

Japan's Nikkei 225 closed 0.6 percent down to 15, 814.37 while Hong Kong's Hang Seng added 0.1 percent to 22,712.78. China's Shanghai Composite Index gained 0.1 percent to 2,047.32. Australia's S&P/ASX 200 shed 0.2 percent to 5,317.00 and Southeast Asian markets were mixed.

Confidence was weakened by lackluster services industry activity in the U.S., Wall Street's fall Monday and recent signs of renewed weakness in China's manufacturing.

"China is defiantly in play right now," said Chris Weston, chief market strategist at IG in Melbourne, Australia. "We certainly aren't seeing the sort of flows that suggest the Chinese and Hong Kong markets are going to see double-digit appreciation this year."

In early European trading, the FTSE 100 index of leading British shares rose 0.1 percent to 6,735.29 while Germany's DAX was nearly flat at 9,431.48. France's CAC-40 was down 0.2 percent at 4,217.19.

Futures in New York pointed to a higher opening on Wall Street. Dow Jones futures rose 0.2 percent to 16,396 and S&P 500 futures were up 0.2 percent to 1,825.10.

On Monday, data showed U.S. service companies grew at a steady but slightly slower pace in December. Sales dipped and new orders dropped to a four-year low, according to a report from the Institute for Supply Management. It suggests growth may remain modest in the coming months.

The most closely watched economic report of the week will come on Friday, when the Labor Department is scheduled to release its jobs survey for December. That's going to influence the Fed's decision on how fast to reduce its bond purchases in the coming months. The Fed has been buying $85 billion worth of bonds each month to keep long-term interest rates low to boost borrowing and spending.

In currencies, the euro dropped to $1.3620 from $1.3634 late Monday in New York. The dollar rose to 104.32 yen from 104.20 yen.

Benchmark oil for February delivery was up 29 cents a barrel to $93.72 in electronic trading on the New York Mercantile Exchange. The contract fell 53 cents to close at $93.43 on Monday.