By Wayne Cole
SYDNEY (Reuters) - Asian stock markets were set to turn lower on Wednesday as economic uncertainty in China and the United States combined with political tensions in Ukraine to keep investors sidelined.
The early signs were dark with Australian stocks off 1 percent and Nikkei futures pointing to an opening loss of at least as much. MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.5 percent.
That mirrored a lacklustre performance by Wall Street where soft data left investors no wiser on whether the economy's troubles were merely weather-related or something more fundamental.
The Dow fell 0.41 percent, while the S&P 500 lost 0.51 percent and the Nasdaq 0.63 percent. In Europe, strong trade figures from Germany helped the DAX outperform with a rise of 0.9 percent.
Tensions over Ukraine continued to simmer. With diplomacy at a standstill, Ukraine's acting president announced the formation of a volunteer national guard, while ousted leader Viktor Yanukovich insisted he remained the country's legitimate leader.
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In Asia, investors are hoping Chinese data on industrial output, retail sales and urban investment due on Thursday might offer some clarity on where the economy is heading.
In the meantime, caution was the watchword as concerns about the state of Chinese demand continued to pressure industrial commodities. While iron ore prices steadied on Tuesday, it was copper's turn to feel the heat as futures sank 2.6 percent to a three-year trough.
Both metals have been used in China as collateral for loans, leaving traders and steel mills vulnerable to a credit squeeze.
"Copper prices continue to slide on concerns that the cyclical metal may face tough times as China slows and rebalances away from investment into consumption," said analysts from Barclays in a note.
"Global risk sentiment has held up well, however, as so far the market does not seem to identify these risks as systemic."
The relative calm was clear in the U.S. Treasury market where yields on 10-year notes have hovered around 2.77 percent for the past couple of sessions.
Supporting sentiment was a Reuters report that China's central bank is prepared to loosen monetary policy if economic growth slows further by cutting the amount of cash that banks must keep as reserves.
Citing sources involved in internal policy discussions, the report said an easing would be triggered if growth slips below 7.5 percent and would come on top of money market operations and currency intervention via state banks that traders say has already loosened monetary conditions overall.
The slide in prices for copper and iron ore undermined Australia's dollar as the country is a major exporter of both metals. The currency was down at $0.8955 on Wednesday having shed half a U.S. cent overnight.
It was one of the few movers among the major currencies which have been trading in tight ranges recently. The dollar eased a touch on the yen to 102.92 as the Japanese currency benefited from its traditional status as a safe haven.
The euro edged lower to $1.3855 after officials from the European Central Bank reminded investors there was still scope to ease policy if needed.
One beneficiary of global uncertainty has been gold, and the metal was holding up well on Wednesday at $1,346.81 an ounce. Oil prices were more mixed, with Brent crude ending Tuesday up 55 cents at $108.55 a barrel, while U.S. oil was down 57 cents at $99.46.
(Editing by Dean Yates)