Asia shares mixed, yen trumps Japan growth data

HONG KONG (AFP) - Asian shares were mixed Thursday, with a strong yen and a slump in Sony pushing Tokyo's Nikkei lower despite data showing the Japanese economy accelerated in the first quarter.

Wall Street provided a negative lead, with the main indexes losing ground in an end to a five-day rally that saw the Dow and S&P 500 notch up fresh records.

Tokyo sank 0.88 per cent by the break, Sydney slipped 0.10 per cent, Shanghai lost 0.22 per cent and Seoul added 0.10 per cent while Hong Kong was 0.19 per cent higher.

Jakarta was closed for a public holiday.

Japan's Cabinet Office said Thursday the world's number-three economy grew 1.5 percent on-quarter in January-March, sharply higher than the previous three months thanks to a rush by shoppers to beat an April 1 sales tax hike.

That compares with revised growth of 0.1 per cent in October-December and is much better than the 1.1 per cent forecast by market-watchers.

It also represents the sixth consecutive quarter of growth and is the fastest since July-September 2011 when the economy picked up from the effects of the quake-tsunami disaster.

Prime Minister Shinzo Abe has pushed big government spending and monetary easing as the solution to conquer years of deflation and tepid growth, which has in turn sent the yen plunging, giving a boost to equities.

But critics fear the sales tax hike - seen as crucial for slashing Japan's massive national debt - will dent a nascent economic recovery.

"The economy will certainly contract in the second quarter of the year, as consumers rein in spending after the tax hike, and residential investment is set to plunge," said Marcel Thieliant, a Japan economist for Capital Economics.

"But forward-looking business surveys... point to a rebound in the second half of the year." However, the Nikkei slipped as exporters were hit by a stronger yen.

The currency rose against the dollar in New York trade on Wednesday following data showing US inflation at 0.6 per cent in April, far above analysts' average estimate of 0.2 per cent.

The dollar dipped to 101.72 yen in Tokyo Thursday from 101.87 yen late in New York and well down from 102.20 yen in Tokyo earlier Wednesday, while the euro was at 139.55 yen and US$1.3717 against 139.70 yen and US$1.3701.

Also in Tokyo, Sony shares dived 6.81 per cent after the electronics giant warned that it would remain in the red for another year after it booked a US$1.26 billion annual loss.

The firm said after markets closed on Wednesday that costs tied to its exit from the personal computer business - part of a wider restructuring - were largely to blame for its woeful bottom line.

In New York the Dow fell 0.61 per cent, the S&P 500 slipped 0.47 per cent and the Nasdaq lost 0.72 per cent following the inflation data and a mixed bag of earnings reports.

The Dow had risen for five straight days before the losses, including three new records.