Asia drops as commodities languish, loonie dips on Canada vote

TOKYO: Asian equities fell across the board on Tuesday after commodity prices languished in the wake of China growth woes and dampened risk sentiment, while the euro hovered near a 10-day low ahead of a European Central Bank meeting that could open the door for more monetary easing.

The Canadian dollar, already under pressure from sliding crude oil prices, faced extra headwinds as Canada's Liberal Party, was tipped to won Monday's general election which would pave the way for increased government spending.

According to a vote projection by CTV News, Justin Trudeau's Liberals were set to topple Prime Minister Stephen Harper's Conservative government, which is known for its fiscal conservatism.

Canada's loonie dipped 0.2 percent to C$1.3038 to the dollar after slumping 0.9 percent overnight on the prospect of voters opting for a prime minister who plans to run deficits to increase infrastructure spending.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.4 percent.

Shanghai shares dropped 0.4 percent and South Korea's Kospi dipped 0.1 percent. Japan's Nikkei bucked the trend and gained 0.3 percent.

Australian stocks lost 0.4 percent as worries about China weighed on mining and energy stocks following Monday's China GDP data.

"The official GDP figures show growth slowed to 6.9% y/y in Q3, down from 7.0% y/y in both Q1 and Q2. Unfortunately, these figures need to be taken with a pinch of salt," economists at Capita Economics wrote.

"Flaws with how the GDP deflator is calculated, along with political pressure to meet growth targets that have become increasingly at risk, have meant that official growth rates have not slowed as quickly as most third party measures of growth in recent years."

Three-month copper on the London Metal Exchange stood little changed at $5,206.50 a tonne after shedding 1.4 percent overnight, while Brent crude oil crawled up 0.3 percent to $48.76 a barrel after sinking 3 percent overnight as China's latest data added to concerns over global growth.

"Pressure on the metals and mining industry has been unrelenting and to be honest, doesn't look like improving any time soon," said commodity strategist Daniel Hynes of ANZ in Sydney.

"The data out yesterday was particularly worrying for commodities considering electricity production, industrial production, fixed asset investment all fell. There's been an implicit feeling that demand would pick up in the fourth quarter. Those numbers potentially derail that outcome."

In currencies, the euro struggled as investors braced for the ECB potentially flagging additional easing measures when its policymakers meet on Thursday.

The common currency was little changed at $1.1334 after reaching a 10-day trough of $1.1306.

The dollar was nearly flat at 119.50 yen while the dollar index also held steady at 94.903 after a 0.2 percent gain overnight.

Following a 2-day surge, the S&P 500 and the Dow ended nearly flat on Monday as advances in top tech and biotech names were offset by caution at the start of a heavy week of earnings.