Asian markets were in hesitant mood on Tuesday as investors wondered what China's response would be to civil unrest in Hong Kong, while the US dollar eased back a touch but was still on track for its biggest monthly gain in well over a year.

Tens of thousands of pro-democracy protesters blocked Hong Kong streets on Tuesday, in one of the biggest political challenges to Beijing since the Tiananmen Square crackdown 25 years ago.

The unrest was an added complication for investors amid long-standing concerns about the health of China's economy.

An HSBC survey of manufacturing (PMI) for September disappointed slightly by showing a final reading of 50.2, steady on August but down from its preliminary 50.5.

One bright spot was a measure of new export orders which climbed to a 4-1/2-year-high of 54.5.

The official version of the PMI is due on Wednesday and analysts look for a steady outcome around 51.0.

Hong Kong's Hang Seng Index shed another 1.3 per cent to its lowest in three months. MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.3 per cent having already fallen sharply on Monday.

Chinese shares have been less troubled, perhaps because news and images of the protests are hard to come by on the mainland.

The Shanghai index inched up 0.1 per cent to near a 19-month peak, while the CSI300 held steady.

Mixed data for Japan

In Japan, the latest data was so mixed that they offered little clarity about the actual state of the economy.

The figures suggested unemployment declined in August and retail sales rebounded, but also that household spending and industrial output had both fallen sharply.

The Topix index retreated 0.8 per cent and away from six-year highs, while the Nikkei also fell 0.8 per cent.

Worryingly South Korea also reported a 3.8 per cent drop in industrial output in August, the biggest fall since the 2008 global financial crisis, though some of that was due to strike action at automakers. Stocks in Seoul eased 0.3 per cent.

MSCI's emerging markets index had also been dragged down by big losses in Brazil.

The Brazilian real fell to a near six-year low and the benchmark Bovespa index notched its biggest one-day drop in more than three years after a poll showed President Dilma Rousseff gaining on challenger Marina Silva ahead of Sunday's election. The Bovespa fell 4.5 per cent.

Asian markets got no help from Wall Street, where the Dow closed down 0.25 per cent on Monday, while the S&P 500 fell 0.25 per cent and the Nasdaq 0.14 per cent.

Shares of companies exposed to Hong Kong fell, with HSBC down 2.3 percent and luxury goods group Richemont off 1.7 per cent.

There was better news for Apple Inc after China approved the sales of the iPhone 6 in the country.

The iPhone 6 had been released in other countries on September 19 but Apple did not give a date for China, the world's largest smartphone market.

Dollar on a roll

The US dollar hovered at a four-year peak against a basket of major currencies and its gains of 3.5 per cent so far this month were the largest since February 2013.

The scale of the gains tempted profit-takers on Tuesday and the dollar took a small step back to 109.34 yen and off a six-year high of 109.75 hit overnight.

The euro came within a whisker of its November 2012 trough of $1.2661 before edging back up to $1.2693.

One of the worst-performing major currencies this month was the New Zealand dollar, which is down nearly 7 per cent.

Data on Monday confirming the Reserve Bank of New Zealand had intervened to weaken the currency sent it as low as $0.7708, before a bounce to $0.7802.

The stronger US dollar has been a heavyweight on many commodities since it makes them more expensive for buyers using other currencies.

Spot gold was down at $1,216.50 an ounce, not far from last week's trough at $1,206.85 and poised to post its sharpest monthly loss since June 2013.

U.S. crude oil eased a couple of cents to $94.55 a barrel, after managing a modest rally on Monday. Brent nudged up 5 cents to $97.25 but remained uncomfortably close to its recent two-year low.

Oil prices on both sides of the Atlantic were on track for their third monthly loss in a row due to ample supply and subdued demand in Europe and China.

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