* MSCI Asia ex-Japan -0.1 pct, Nikkei +0.8 pct
* China shares lead weakness on manufacturing data, trade worries
* Washington could announce plans for tariffs as early as Weds
By Andrew Galbraith
SHANGHAI, Aug 1 (Reuters) - Asian shares gave up ground on Wednesday, with weak data in the region and fears of an imminent escalation in the tariff war between the United States and China pulling markets lower even as strong earnings out of the U.S. provided some support.
Conflicting signs over the state of U.S.-China trade relations pulled markets in opposite directions. A Bloomberg report on Tuesday said that the United States and China were seeking to resume trade talks to defuse a battle over import tariffs.
However, later reports that the U.S. administration plans to propose tariffs of 25 percent instead of the initially proposed 10 percent on $200 billion of imported Chinese goods injected uncertainty back into financial markets.
A source familiar with the plan said the announcement could come as early as Wednesday.
Chinese shares, the offshore yuan and the Australian dollar all weakened.
A source familiar with the Trump administration’s tariff plans for China told Reuters that an announcement could come as early as Wednesday.
“We maintain our view that negotiated settlement will be the most likely outcome. However, getting to this stage will still lead to marked volatility in the markets as this process will be protracted, with both sides digging their heels to present a better deal to respective constituents,” Everbright Sun Hung Kai analysts said in a note.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.1 percent, erasing earlier gains, while Japan’s Nikkei stock index gained 0.8 percent. S&P E-mini futures were down less than 0.1 percent at 2,815.75 after earlier edging higher.
Spreadbetters in Europe pointed to more mixed trade in Europe, with London’s FTSE set to open 12 points lower, Frankfurt’s DAX 1 point higher and Paris’ CAC down 8 points.
The Taiwan weighted index rose 0.4 percent, with tech shares getting a boost after Apple Inc. beat Wall Street expectations for its quarterly results thanks to robust sales of its top-of-the-line iPhone X. The company’s shares rose 3.4 percent to $196.80 in after-hours trade.
But shares in mainland China dropped, erasing early gains, with trade war fears and a private survey of purchasing managers pointing to a cloudy economic outlook.
The survey showed China’s manufacturing sector grew at its slowest pace in eight months in July, dragged down by declining export orders.
The Shanghai Composite index fell 0.8 percent, while the blue-chip CSI300 index lost 1 percent.
Australia’s manufacturing sector also showed slower activity in July, with the Commonwealth Bank/Markit purchasing managers index at its lowest level in nearly two years.
Australian shares were flat, with some support coming from miners ahead of expected strong results from Rio Tinto later on Wednesday.
Policy meetings at the U.S. Federal Reserve on Wednesday and the Bank of England on Thursday also kept some investors on the sidelines.
Although the U.S. central bank is expected to hold rates unchanged, investors will be looking for any change in the tone of its policy statement.
“Buying sentiment towards the dollar could receive a boost if the central bank strikes a hawkish tone,” Lukman Otunuga, research analyst at FXTM, wrote in a note.
The yield on benchmark 10-year Treasury notes was at 2.9766 percent, compared with its U.S. close of 2.964 percent on Tuesday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 2.6776 percent compared with a U.S. close of 2.669 percent.
The dollar rose 0.1 percent against the yen to 111.96 , and gained 0.5 percent to 6.8390 against China’s offshore yuan on news of the Trump administration’s tariff plans. The Australian dollar fell 0.3 percent to $0.7406.
The euro was down 0.1 percent on the day at $1.1676. The dollar index, which tracks the greenback against a basket of six major rivals, gained 0.2 percent to 94.663.
Meanwhile, oil prices fell on industry data showing an unexpected rise in U.S. crude stockpiles. The slump in crude prices comes after their largest monthly decline in two years in July.
U.S. crude dipped 0.4 percent to $68.47 a barrel, while Brent gave up 0.2 percent to $74.04 per barrel.
Spot gold fell 0.3 percent to $1,219.91 per ounce.
Editing by Joseph Radford and Simon Cameron-Moore