Asian shares stuttered after giving up small gains on Tuesday, as modest relief on data showing the Chinese economy grew slightly more than expected failed to assuage lingering concerns of weakening momentum in the world’s second-biggest economy.

China’s gross national product expanded 7.3 per cent between July and September from a year earlier, slightly above expectations but slower than the 7.5 per cent clocked in the second quarter.

It was also the weakest growth rate in nearly six years, putting at risk Bejing’s official annual growth target for the first time in 15 years and adding to worries that China is becoming a drag on the global economy.

“The data was better than I expected, more optimistic than we thought. But we definitely cannot achieve the 7.5 per cent growth target this year,’’ said Lin Caiyi, chief economist at Guotai Junan Securities in Shanghai.

Other data showed factory output rose 8.0 per cent in September from a year earlier, beating expectations for a 7.5 per cent increase and up from August’s six-year low of 6.9 per cent.

However, fixed asset investment and retail sales figures were weaker than expected, suggesting that Beijing still has reason to announce a fresh round of economic support measures though analysts don’t see aggressive stimulus steps.

“Looking ahead, we see that China’s growth momentum will only pick up modestly in Q4, as massive policy easing is unlikely,’’ ANZ economists said in a note to clients.

MSCI’s broadest index of Asia-Pacific shares outside Japan erased modest gains made after the Chinese figures, and bobbed around the previous session’s close. The Shanghai Composite index slipped 0.3 per cent.

Japan's Nikkei stock average extended losses as the yen strengthened and investors locked in profits after the previous session's rally.

The Nikkei shed 1.2 per cent after surging 4 per cent on Monday, its biggest rise since June 2013, buoyed by the global rebound as well as news that Japan's $1.2 trillion public pension fund was likely to more than double its allocation to domestic stocks.

Wall Street marked solid gains overnight despite a quarterly earnings miss from IBM, and Apple Inc posted a better-than-expected 12 per cent jump in revenue after the close.

Early on Monday, Dallas Federal Reserve President Richard Fisher told CNBC television that last week's turbulent trading should not stop the Fed from ending its third round of quantitative easing.

The consensus view is that the Fed will decide to wrap up its bond purchases for QE3 later this month, at its October 28-29 policy meeting, while short-term interest rates futures implied markets do not expect the US central bank to raise rates until late 2015.

Those expectations, combined with fears about the Ebola virus and fighting in West Asia, have kept benchmark Treasury yields not far above 2 per cent, and capped the dollar’s gains.

The yield on benchmark 10-year notes slipped to 2.161 percent in Asian trade, compared to Monday’s US close of 2.183 per cent.

The dollar fell about 0.4 per cent against the yen to 106.55 yen, while the euro ticked up slightly to $1.2811.

The Australian dollar, often seen as a liquid proxy of China’s growth prospects given Australia’s large trade exposure to the Asian giant, jumped a quarter of a US cent after the Chinese growth data.

The Aussie rose to a session high of $0.8819, from $0.8773 before the figures, and was last up about 0.4 percent at $0.8815.

In commodities trading, spot gold edged up to $1,246.84 an ounce, close to its overnight levels and bolstered by renewed physical demand related to Diwali, India’s major bullion-buying event this week.

Brent crept was up about 0.2 per cent at $85.55 a barrel, while US crude added 0.4 per cent to $82.96

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