Asian markets drift as traders eye early finish for holiday

Asian markets were muted in thinned business Tuesday as investors across the region traded with an eye on the early finish ahead of the Christmas break.

Another record lead from Wall Street was unable to spur another rally, though analysts are optimistic the new year could start on a positive note with China-US trade tensions dialled down and the economic outlook improving.

With many bourses due to close early ahead of the festive holiday, turnover was shallow and morning business markets swung back and forth.

Hong Kong and Tokyo were each 0.1 per cent lower, while Shanghai rose 0.2 per cent.

Singapore, Seoul and Taipei each dipped slightly while Wellington posted gains of 0.8 per cent as the mini pact between China and the US continues to provide support. The two economic superpowers are expected to sign off the deal early next month.

China's announcement Monday that it will cut tariffs on hundreds of imported goods from around the world added to the positive sentiment.

Chinese Premier Li Keqiang's pledge to further reduce the amount of cash banks must keep in reserve -- freeing up billions of dollars for lending -- provided further support.

"News that China intends to lower import tariffs on a wide range of goods along with comments from Premier Li Keqiang confirming the government will continue to introduce measures to lower borrowing costs have helped sentiment," said National Australia Bank's Rodrigo Catril.

While world markets have had a bumpy ride from the ups and downs of the trade row this year, many are due to end it with huge gains, with Tokyo, Sydney and Shanghai up by about a fifth. Hong Kong, which has also been battered by months of sometimes violent protests, managed to squeeze out gains of around eight percent.