By Willa Plank

'Low productivity' drags Kospi; Nikkei rises on positive U.S. data

Asian markets were mixed Tuesday following the release of data pointing to a South Korean slowdown.

South Korea gross domestic product grew 2.7% year-on-year in the third quarter, down from a 3.3% gain in the prior three-month period, according to preliminary data from the Bank of Korea. Business investment declined in the country amid frail private consumption and weak exports.

Analysts said that without brisk housing construction -- made possible by cheap bank loans and easier mortgage rules supported by financial authorities -- Korean growth would have slowed further.

"Low productivity is prevalent, in particular in the services sector and among small and medium-sized enterprises," Fitch Ratings said in a report about the South Korean economy.

Korea's Kospi was down 0.8%. Both the Hang Seng Index and the Shanghai Composite were down about 0.2%.

Chinese stocks slipped Tuesday, as a yuan decline offset gains by resource stocks. Beijing on Tuesday set the onshore yuan against the greenback at 6.7744, down 0.08% from Monday, to a fresh six-year low. This fueled fresh concerns that the currency was on a sustained depreciation path.

However, Chinese coal and steel shares were gaining, as analysts expected that more and more coal mines and steel mills would turn profitable as Beijing aggressively cuts capacity in those sectors.

   Meanwhile, Japan's Nikkei   was up 0.7% and Australia's S&P/ASX 200   gained 0.6%. 

Japanese stocks were up after solid U.S. manufacturing data increased speculation about a U.S. rate increase in December, which boosted the dollar against the yen.

The Markit flash U.S. manufacturing purchasing managers' index rose to 53.2 in October from 51.5 in September.

"We're back at that sanguine environment," said Chris Weston, chief market strategist at IG. "The barriers for a December [U.S. Fed rate] hike are very low," he said.

A cheap yen is good for Japan's exporters, as it makes their good more competitive internationally.

Auto and financial stocks led the Japanese market higher. Motor maker Nidec (6594.TO) was up 4.8%, Mazda Motor (7261.TO) was up about 3% and Sumitomo Mitsui (8309.TO) ained 3%. Kyushu Railway (9142.TO) made its debut on the Tokyo Stock Exchange on Tuesday with its shares climbing 20% compared to the initial public offering price in the first 15 minutes of trading.

(END) Dow Jones Newswires

October 24, 2016 23:06 ET (03:06 GMT)