Japan’s Nikkei Stock Average NIK, +0.50% closed up 0.5%, moving into positive territory after spending much of the session flat. Australia’s S&P/ASX 200 XJO, -0.32% ended 0.3% lower, Korea’s Kospi SEU, +0.43% added 0.4%, and the Hang Seng Index in Hong Kong HSI, +0.06% closed up 0.1%.
Market “sentiment is not very strong at this moment in the lead-up to the FOMC meeting,” said Jingyi Pan, a market strategist at IG Markets.
The two-day Federal Open Market Committee meeting will kick off later Tuesday, when U.S. central bankers will decide whether to raise interest rates before the decision is delivered Wednesday. According to CME Group’s FedWatch tool, the likelihood of a rate increase is 95.4%, up from 94.9% on Monday.
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Rate rises by the Federal Reserve typically spook emerging markets, as investors tend to pull out their money and repatriate it to the U.S. in search of higher yields.
In Hong Kong, PetroChina 0857, +5.30% closed up 5.3% at a seven-month high on the Sinopec pipeline deal to sell a 50% stake in its Sichuan-to-East-China gas pipeline to two other state-owned companies for 22.8 billion yuan ($3.3 billion).
More broadly, China’s major oil firms rose for a second day on overall oil strength after the Organization of the Petroleum Exporting Countries signed a landmark production cut deal with non-OPEC producers.
In Japan, shares of industrial-equipment maker SMC 6273, -3.51% tumbled 10% to their lowest level since August after Well Investments Research, a research firm known for its bearish stock calls, issued a report questioning the company’s cash positions, inventory values and accounting practices. A representative for SMC wasn’t immediately available for comment. The stock closed down 3.5%.
Elsewhere, data from China’s National Bureau of Statistics on Tuesday showed that industrial output in China accelerated 6.2% in November from a year earlier, up from a 6.1% increase in the previous month. The reading slightly outpaced a median forecast of 6.0% growth by 14 economists surveyed by The Wall Street Journal.
Chinese retail sales also grew, up 10.8% in November from a year earlier, accelerating from a 10.0% increase in October. The reading was higher than economists’ median forecast for a 10.3% rise in November.
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Housing sales by value rose 16.2% in November, slowing from a 38.3% increase in October. The deceleration came in the wake of a slew of stricter property-buying controls in October to rein in frothy home prices, which dampened buying sentiment and developer confidence.
Among the bigger Hong Kong-traded Chinese property stocks, China Vanke 000002, -0.86% fell 2.4%, China Overseas Land & Investment 0688, -0.91% slipped 0.9% and Guangzhou R&F Properties 2777, -1.81% dropped 1.8% Tuesday.
Meanwhile, investor worries that the tumble in China markets on Monday might be repeated proved unfounded as the benchmark Shanghai Composite Index SHCOMP, +0.07% reversed from intraday losses to close up 0.1%. In Shenzhen 399106, +0.33% , the main board added 0.3%, while the tech-heavy ChiNext board ended flat.
According to a Bank of America note, though, many of the “disturbing trends” in China that caused the market crash in summer 2015 remain or have worsened, such as the dominance of trading by individuals, rising leverage, and selling by major shareholders. Nevertheless, levels of both trading volumes and margin loans remain a fraction of what they were in the summer of 2015.
— Olivia Geng, Dominique Fong and Kosaku Narioka contributed to this article.