Asian shares mostly down despite upbeat China factory data

Asian shares were mostly down on Thursday after a fall on Wall Street, despite China posting positive manufacturing data that hit a seven-month high in October.

British bank HSBC's preliminary purchasing managers' index (PMI) for this month was 50.9, a significant improvement from September's 50.2 and the highest since 51.6 in March, adding to evidence the world's second-largest economy is recovering.

Tokyo was 0.42 percent down by the break, Hong Kong slid 0.93 percent, Sydney was up 0.38 percent, Seoul was flat and Shanghai slid 0.56 percent.

The upbeat data from China followed "broad-based modest improvements" in the Chinese economy, said Qu Hongbin, a HSBC economist in Hong Kong, in a statement accompanying the figures.

"This momentum is likely to continue in the coming months, creating favourable conditions for speeding up structural reforms," he said.

The PMI tracks manufacturing activity in China's factories and is a closely watched gauge of the health of the economy. A reading above 50 indicates growth, while anything below signals contraction.

In the US, stocks ended lower Wednesday in a decline that analysts attributed to a mix of profit-taking and a couple of prominent earnings disappointments.

The Dow Jones Industrial Average dropped 0.35 percent, the broad-based S&P 500 slid 0.47 percent and the Nasdaq Composite Index declined 0.57 percent.

The losses came on the heels of a 10-day winning streak that saw the S&P 500 gain almost 6 percent.

"We had some disappointing earnings here in the US but I think it's more a function of how much we've been up all across the board, a natural breather after a very strong rally," said Alec Young, a global equity strategist at S&P Capital IQ.

Other analysts said weak earnings reports from Dow components Caterpillar and Broadcom exacerbated anxiety in the wake of the recent partial US government shutdown.

Caterpillar fell 6.1 percent after earnings declined 44 percent and the company slashed its full-year forecast for the third straight quarter, while semiconductor firm Broadcom fell 2.9 percent after announcing it was cutting 1,150 jobs.

The dollar was changing hands at 97.47 yen early Thursday, compared with 97.32 in New York Wednesday afternoon and 97.38 in Tokyo.

In oil trade, New York's main contract, West Texas Intermediate (WTI) for delivery in December, was up 54 cents at $97.40, while Brent North Sea crude for December gained four cents to $107.84.

Gold rose to $1,335.26 at 1045 GMT compared with $1,329.88 on Wednesday.