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US stocks dropped on Monday after the Institute for Supply Management said its index of national factory activity fell to 51.3 from 54.2 in February, with new orders, a key indicator of future growth, accounting for much of the fall.
The decline came as US trading resumed on Monday after an early close on Thursday, when the Standard & Poor's 500 Index touched a record high, with markets closed for the Good Friday holiday.
"The weak manufacturing ISM points toward softening activity at the end of Q1 and reinforces concerns that the fiscal tightening may adversely affect growth in the remainder of the year," Barclays Capital said in a research note. "Weak international growth, coupled with a strong dollar and a decelerating ISM in the US, could set up weaker sentiment heading into the 2013 first quarter earnings season."
A recent run of generally solid US economic reports helped restore global risk appetite despite worries in the euro zone after the Cyprus bailout and some growth concerns in China.
The private ADP employment report and the latest weekly jobless claims figures precede the key monthly US nonfarm payrolls report on Friday.
The MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3%, pulled higher by a 0.5% gain in Australian shares as investors returned from the Easter break looking for bargains after last week's dip.
Australian investors will focus on comments by the Reserve Bank of Australia, which is expected to keep interest rates unchanged at a record low 3.0% at its policy meeting this session.
South Korean shares opened nearly unchanged.
The weak US data weighed on the dollar, pushing it down to a one-month low of 93.06 yen early in Asia on Tuesday before rebounding to trade at 93.17 yen. The euro steadied around 119.65 yen, a tad above to 119.49 yen hit on Monday, its lowest since February 27.
The Nikkei stock average opened down 0.7% after falling to a one-month low on the first day of Japan's new fiscal year on Monday as investors took profits after the index had its best quarterly performance in nearly four years in the first three months of 2013.
Both the Bank of Japan and the European Central Bank hold policy meetings later in the week. The BOJ is expected to announce fresh stimulus measures under its new leadership in line with Prime Minister Shinzo Abe's drive to reflate the economy.
The euro held around $1.2847, not far from a four-month low of $1.2750 touched last week.
Major depositors in Cyprus' biggest bank will lose around 60% of holdings over 1,00,000 euros, its central bank confirmed on Saturday, sharpening the terms of a bailout that has shaken European banks but saved the island from bankruptcy.
Tensions in the Korean Peninsula could weigh on sentiment.
South Korea's new president vowed on Monday to strike back quickly if North Korea staged any attack, but the United States said it had seen no worrisome mobilization of armed forces by North Korea, despite Pyonyang's bellicose rhetoric.
US crude futures fell 0.2% to $96.86 a barrel.
