December 31, 2019 / 6:59 AM / 2 months ago

CORRECTED-GLOBAL MARKETS-Asian shares slip as investors lock in gains from 2019 rally

(Corrects to remove references to DAX and Euro STOXX 50 futures, which are not trading)

* MSCI Asia ex-Japan -0.45%, up nearly 16% on year

* European shares tipped to fall at open

* U.S., China expected to sign deal soon - White House officials

* China Dec manufacturing activity better than expected

* Asian stock markets: tmsnrt.rs/2zpUAr4

By Andrew Galbraith

SHANGHAI, Dec 31 (Reuters) - Asian shares were mostly lower on Tuesday, in their last trading day of the decade as investors locked in profits after a buoyant year of gains, driven in recent weeks by hopes of an imminent U.S.-China trade deal.

European equity markets were expected to follow suit after losses on Wall Street Monday. FTSE futures were down 0.37% at 7,508.

But U.S. stock futures showed some optimism ahead of Wall Street's final session of the year, with S&P 500 e-minis up 0.12% at 3,227.3.

At about 0620 GMT, MSCI's broadest index of Asia-Pacific shares outside Japan was 0.46% lower, set for its weakest performance since Dec. 4. For the month, the index is still up 5.6%.

The index has gained nearly 16% this year, a sharp turnaround from a 16.2% drop last year but lagging a 23.8% year-to-date gain in MSCI's global share index. The Asian index gained 33.5% in 2017, about the same as its total rise over the previous decade.

Australian shares ended their best year since 2009 1.78% lower, and Hong Kong's Hang Seng finished down 0.46% in a half-day session.

"We are seeing some profit-taking into year-end," said Ryan Felsman, senior economist at CommSec in Sydney, adding that progress on resolving the 17-month-long U.S.-China trade war remained a positive factor for investors into the new year.

The White House's trade adviser on Monday said the U.S.-China Phase 1 trade deal would likely be signed in the next week, but said confirmation would come from President Donald Trump or the U.S. Trade Representative.

"We think that the global growth situation is improving, we're seeing better industrial profits in China ... green shoots in the manufacturing sector on the back of an improvement in the trade situation is a key catalyst going forward," he said.

While easing trade concerns and lifting uncertainty around Britain's exit from the European Union have helped reduce some near-term market uncertainty, investors remain worried about a recession, seen as inevitable in the new decade.

Positive Chinese manufacturing data, which showed factory activity expanding for a second straight month in December, nudged China's blue-chip CSI300 index 0.3% higher, extending the more-than-33% gain seen this year.

China's gains built on Monday's rally, which was driven by a combination of strong retail sales growth and hopes that a new benchmark for floating-rate loans could lower borrowing costs.

Markets in Japan and South Korea were closed for a holiday.

The falls in Asia came after profit taking pushed the Dow Jones Industrial Average down 0.64% to 28,462.14, the S&P 500 0.58% lower to 3,221.29 and the Nasdaq Composite off 0.67% to 8,945.99.

U.S. Treasury futures inched lower, reflecting an implied yield of 1.81%. That followed a rise in benchmark U.S. Treasury yields on Monday that pushed the U.S. two-year, 10-year yield curve to its steepest in 14 months.

The dollar continued to weaken against the yen for a third straight session, dropping 0.20% to 108.65 and hitting its lowest level since Dec. 12. The euro strengthened 0.06% to buy $1.1204.

The dollar index, which tracks the greenback against a basket of six major rivals, was 0.05% lower at 96.692.

U.S. crude dipped 0.13% to $61.60 a barrel and Brent crude edged down to $66.65 per barrel. The global benchmark remains up 23.8% for the year.

Gold continued its rally on a weakening dollar. On the spot market, the precious metal was changing hands at $1,523.14 per ounce, up 0.53%. Gold prices have risen 18.7% so far this year.

Reporting by Andrew Galbraith; Editing by Sam Holmes

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