Asian stocks ended mixed on Wednesday amid rising U.S.-China tensions and ahead of the results of two key Senate runoffs in Georgia that will determine how much U.S. President-elect Joe Biden can push through Democrats' agenda.
The Trump administration has signed an executive order banning transactions with eight Chinese apps, saying they are a threat to U.S. national security.
Adding to market uncertainty was the New York Stock Exchange's back-and-forth deliberations over whether to delist Chinese stocks on security grounds.
China's Shanghai Composite index rose 0.63 percent to 3,550.88. The services sector in China continued to expand in December, albeit at a slower pace, the latest survey from Caixin showed with a services PMI score of 56.3, down from 57.8 in November. The composite index fell to 55.8 from 57.5 in November.
Hong Kong's Hang Seng index ended 0.15 percent higher at 27, 692.30 even as a survey showed the private sector in Hong Kong fell deep into contraction territory in December, with a PMI score of 43.5.
Japanese shares fell for a third straight session as investors fretted about the economic impact from the month-long state of emergency planned by the Japanese government to fight a surge in coronavirus cases.
The Nikkei average ended down 102.69 points, or 0.38 percent, at 27,055.94, while the broader Topix index closed 0.28 percent higher at 1,796.18.
Tech shares fell, with Advantest losing 2.4 percent and Tokyo Electron falling 1.6 percent. Heavyweight Fast Retailing lost 2.5 percent, while SoftBank Group rose 1.3 percent.
On the economic front, the latest survey from Jibun Bank revealed that the services sector in Japan contracted at a faster rate in December, with a PMI score of 47.7, down slightly from 47.8 in November.
Australian markets fell sharply amid fears that tougher lockdown restrictions will hurt growth.
The benchmark S&P/ASX 200 lost 74.80 points, or 1.12 percent, to finish at 6,607.10 as the country's largest city Sydney continued to battle a number of virus clusters.
The broader All Ordinaries index ended down 74.30 points, or 1.07 percent, at 6,881.40.
Healthcare stocks fell broadly, with heavyweight CSL falling 2.5 percent. Banks ANZ, Westpac and NAB fell between 0.8 percent and 1.2 percent. Insurance Australia Group climbed 1.1 percent after it announced a finalized catastrophe reinsurance program for 2021.
Energy stocks bucked the weak trend after oil prices jumped around 5 percent overnight on news of proposed output cuts by major producer Saudi Arabia. Woodside Petroleum, Origin Energy and Santos rose about 2 percent, while Oil Search soared 5.7 percent.
In economic news, the latest survey from Markit Economics revealed that the services sector in Australia expanded at a faster pace in December, with a five-month high PMI score of 57.0.
Seoul stocks ended lower to snap a seven-day winning streak. The benchmark Kospi slipped 22.36 points, or 0.75 percent, to 2,968.21 after closing at record highs for six sessions in a row. Market bellwether Samsung Electronics dropped 2 percent and Hyundai Motor, the country's largest automaker, tumbled 3.1 percent.
New Zealand shares fluctuated before ending modestly lower. The benchmark NZX-50 index dropped 33.72 points, or 0.25 percent, to 13,333.93.
U.S. stocks rose overnight as energy stocks benefited from higher oil prices and a gauge of U.S. manufacturing activity rose to the highest level in nearly 2-1/2 years in December.
The Dow Jones Industrial Average gained 0.6 percent, the tech-heavy Nasdaq Composite rallied 1 percent and the S&P 500 added 0.7 percent.
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