By Lisa Twaronite
TOKYO (Reuters) - Asian shares gave back some of their China-inspired gains on Tuesday, while oil prices stumbled as traders lowered their expectation of a significant output cut at this week's OPEC meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent after rallying in the previous session following China's surprise interest rate cut.
Japan's Nikkei stock average added 0.4 percent, even in the face of a stronger yen which usually weighs on shares. 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 Tuesday, China's central bank lowered the yield for a key short-term money rate, the fourth time it has done so this year, as regulators step up efforts to reduce funding pressure for Chinese companies.
On Wall Street on Monday, both the Dow Jones industrial average and the S&P 500 marked fresh record closing highs.
Oil prices lost more ground 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 was down about 0.1 percent on the day at $75.71 a barrel, while Brent also slipped about 0.1 percent to $79.57 a barrel.
The dollar gave up its early modest gains against the yen, edging down about 0.3 percent to 117.94 yen and moving away from its 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.
"The central bank minutes showed that there was some concern expressed about the weak yen and that seems to have taken dollar/yen off its stride," said Shinichiro Kadota, chief Japan FX strategist at Barclays in Tokyo.
In a speech on Tuesday, Kuroda stressed the bank's readiness to expand stimulus further to meet its price goal.
On the U.S. data front, financial data firm Markit said on Monday that 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 fell about 0.2 percent to $1.2435, moving back 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.
(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Shri Navaratnam)
