By Swati Pandey
SYDNEY (Reuters) – Asian stocks developed on Monday as investors breathed a sigh of relief after encouraging Chinese data suggesting that the world's second-largest economy could begin to stabilize thanks to the ramp-up of Beijing's stimulus .
Quarterly economic growth declined to 6.2% in the second quarter from the previous year, the weakest pace for at least 27 years, while separate data showed the country's industrial production and retail with peaked forecasts.
The promising monthly activity data suggested a thrill of stimulus from China has been able to maintain domestic activity and counteract some of the damage from a protracted trade war with the United States, analysts said.
The stock markets were choppy in the wake of Chinese data that some expect Beijing to affect further stimulus.
MSCI's widest index for Asia-Pacific stocks outside Japan yielded losses of 0.2% higher at 526.72 points. It fell slightly more than 1
The trade was expected to be easy when Japan was closed for a holiday holiday.
Australian shares fell 0.4% while South Korea's KOSPI was mostly flat. Chinese stocks paired early losses with the blue-chip index up 0.4%. Hong Kong's Hang Seng index rose 0.3%.
"Investors may be scaling back to ease expectations for today's data as fiscal measures seem to work," Westpac analyst Frances Cheung said.
"It is said that we believe that PBoC will continue to support liquidity. Expect that dividends should be stable and any temporary bearishness expressed through swaps."
Later in the week, US retail and industrial product data will provide more clues about the health of the world's largest economy. US central bank will release its Beige Book on Wednesday, which investors will scour for comment on how trading tensions affect business prospects.
In foreign exchange markets, Australian dollars have often played as a liquid proxy for the Chinese yuan, leaping for the data at a high of $ 0.7033, a level not seen since July 4.
The greenback was slightly higher at 96,871 against a basket of large currencies. The dollar index fell for three consecutive days, as the markets were fully priced at a 25 basis point (bps) cut to US interest rates. There is also a small probability of a 50 bps cut.
Against the Japanese yen, the dollar crossed from almost the lowest since the beginning of June 108.04, while the common currency was slightly lower at $ 1.167 after three successive sessions. 19659002] Expectations that the Fed will support interest rates have sent bonds along with ten-year US government bonds under the current Fed rate of 2.25% -2.50%.
"Dovish Fed rhetoric has made a July price swing, in the eyes of the market, as a fait accompli: it's not about the cuts, but how much," Morgan Stanley strategist Hans Redekar told clients in a note.
Redkar said the bank entered its short dollar / long yen position.  "If markets are disappointed, the yield curve is likely to be flat, USD strengths and financial conditions tightened. These forces will exacerbate the already big heads facing the global economy," he added.
"Global reflation requires a weaker USD to strengthen global trade and commodity prices."
Concerns about world growth and low inflation have prompted investors to cash in on bonds and money market funds, Jefferies says, citing its global real estate fund track.
"The danger is with a rock of money parked in money market funds, any ceasefire will lead to a major shift away from secure assets," said Sean Darby, Jefferies' global capital strategist.
"At present, investors do not seem to be in any particular rush to buy stocks – income audits have not yet settled while economic surprises have been rare," he added.
"The bottom line is that we want to take a break from the risk US crude oil fell 31 cents to $ 59.90 a barrel. Brent crude was 22 cents at $ 66.50.
Gold sank to 1,410.01 an ounce drifting away from a last six years peak of $ 1438.60