Asian shares wobble, oil skids ahead of key OPEC meeting this week

TOKYO (Reuters) - Asian shares gave back some of their China-inspired gains on Tuesday, while oil prices slumped ahead of this week's OPEC meeting.

MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.3 per cent after rallying in the previous session following China's surprise interest rate cut.

Japan's Nikkei stock average added 0.6 per cent. Markets in Japan were closed on Monday for a national holiday, and were playing catch-up to late Friday's news of an unexpected reduction to interest rates from the People's Bank of China. Sources also told Reuters that Beijing was ready to take further easing steps.

On Wall Street on Monday, both the Dow Jones industrial average and the S&P 500 marked fresh record closing highs.

Oil prices continued to slide ahead of a much-anticipated meeting of the Organization of the Petroleum Exporting Countries later this week.

"The reduced leverage that OPEC now has over the oil market is likely to make it more cautious about cutting production," strategists at Barclays said in a note. "The rapid growth being achieved in non-OPEC production means it faces the risk that even a large cut to supply may not be enough to support prices and could simply result in lost market share and revenue," they said.

Russia, which needs higher oil prices to support its economy, tried to sway OPEC to slash production, suggesting Moscow could cut its own crude output.

U.S. crude edged down about 0.2 per cent to US$75.65 a barrel.

The US dollar edged up about 0.1 per cent to 118.44 yen inching back toward a seven-year high of 118.98 touched on Thursday.

The yen has come under renewed pressure since late last month, when the Bank of Japan stunned markets by expanding its massive stimulus program. Minutes of the Oct. 31 meeting released on Tuesday showed BOJ Governor Haruhiko Kuroda proposed the additional steps.

On the U.S. data front, financial data firm Markit said its"flash" services Purchasing Managers Index hit 56.3 in November, slightly below expectations and the lowest since April, as growth in new business slowed.

The euro edged down about 0.1 per cent to $1.2435 toward a two-year low of $1.2358 touched on Nov. 7.

Underpinning the single currency, the head of the Bundesbank warned that the European Central Bank would face legal obstacles if it went down the path of quantitative easing to bolster euro zone prices and growth.

Jens Weidmann, who also sits on the ECB's Governing Council, raised questions over the ECB's ability to deliver the measures that ECB President Mario Draghi indicated were possible, hinting at disagreement within the ECB ahead of its next meeting on Dec. 4.

Also on Monday, a report showed German business sentiment rebounded in November after six straight declines.

Join ST's Telegram channel and get the latest breaking news delivered to you.