SYDNEY (Reuters) - Asian markets were on edge on Tuesday ahead of data expected to show China's economy grew at the slowest pace in 24 years last quarter, adding to the case for more stimulus measures both at home and abroad.
A soft result would only magnify concerns about global demand and put further pressure on commodity prices, with oil slipping again on Monday.
Investors are already in a skittish mood after the major Chinese indices suffered their biggest one-day drop since the global financial crisis after regulators cracked down on speculative lending.
Both the Shanghai Composite Index and the CSI300 index of the largest listed companies in Shanghai and Shenzhen ended Monday with losses of more than 7 percent.
Expectations are that the world's second-largest economy grew 7.2 per cent last quarter, the slowest pace since the first quarter of 2009 and short of Beijing's target of 7.5 per cent.
Also due are Chinese retail sales, industrial output and urban investment for December.
Early action was muted after a holiday in U.S. markets and Australia's main share index inched into the red. MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.1 per cent.
European shares had fared better on Monday amid intense speculation the European Central Bank will this week extend asset purchases to euro zone sovereign bonds, giving it greater scope to expand its balance sheet.
A Reuters poll of money market traders found the median expectation was for a package worth 600 billion euros, though most also felt that would not be enough to bring inflation up to target.
Indeed, many in the market would prefer an initial target of at least 1 trillion euros or, even better, an open ended commitment to buy as much as necessary to get inflation higher.
Still, the prospect of any action from the ECB was enough to lift Germany's main index to an historic high while the FTSEurofirst index of 300 leading European shares hit a seven-year peak.
Spain's 10-year government bond yield hit a new low of 1.47 per ent and Italy's benchmark yield fell as low as 1.62 percent.
The euro recovered just a little ground on the U.S. dollar after hitting an 11-year low last week, to stand at US$1.1600 . The common currency made more progress on the Swiss franc to reach 1.0199 francs, but that follows a 17 per cent plunge last week.
There were further ripples from the Swiss decision to un-peg the franc with Denmark surprising by cutting interest rates further into negative territory on Monday.
The move was aimed at preventing a rise in the Norwegian crown against the beleaguered euro, and other central banks in peripheral Europe will be under pressure to follow.
In commodity markets, oil's long decline showed no sign of stopping with the latest blow coming as Iraq announced record production of the fuel.
Brent crude was quoted at US$48.85 a barrel, having fallen US$1.32 on Monday, while U.S. benchmark crude was last traded down US$1.20 at US$47.49 a barrel.