Asian markets concede early gains

Asian stocks outside Japan struggled to hold on to early gains on Monday, as investors remained wary before a slew of corporate earnings and a Fed meeting this week expected to paint a cautious picture of the world's biggest economy.

Concerns about rising inflation gave investors an excuse to book profits in some Asian markets after strong rallies in 2010, but rather than exiting the region funds were being reallocated to countries seen as having a better grip on price pressures.

The MSCI index of Asia Pacific stocks outside of Japan was flat on the day after being up nearly 0.3 percent in early trade.

China's Shanghai Composite Index fell 0.7% at 2,696 ahead of the Chinese New Year holidays next week on back of strong demand for cash. Hong Kong's Hang Seng index also declined 0.3% at 23,802, Japan's Nikkei average ended up 0.7%, with resource shares popular and recently beaten-down exporters bought amid expectations of robust earnings reports from Japanese firms this week.  Taiwan Weighted closed lower 8,947, down 0.3%. The Straits Times, Singapore's benchmark index ended flat at 3,186 (up 0.04%) and Seoul Composite was up 0.6%, at 2,082.

Moreover, the broad MSCI Asia Pacific ex-Japan 12-month forward price/earnings ratio is still below the long-term average, indicating valuations still remain attractive, according to Thomson Reuters data, while inflows into emerging markets have persisted.

Data for the third week of January from fund tracker EPFR Global showed inflows into emerging market equity and bond funds have continued, with a total of $101 billion flowing into emerging market equity funds since the start of 2010.

Major European indices retreated at 3 pm dragged down by losses in auto and technology shares after Roya Phillips which makes television; lighting and medical equipments missed estimates. The CAC 40 was trading flat at 4013, down 0.1%, the DAX was trading at 7,020, down 0.6% and the FTSE 100 was trading at 5,893, down 0.03%.