After Monday's steep plunges, Asian markets suffered from motion sickness Tuesday, with indices moving mostly within tight ranges to end the day mixed.

After falling as much as 2% in mid-morning trading, the Hang Seng clawed its way back to end up 137 points, or 0.5%, at 27,803 on the day, while in China the Shanghai Composite Index lost early gains, finishing down 29 points, or 0.5%, at 5158.

In Japan, the Nikkei continued Monday's fall into negative territory for the year, easing 70 points, or 0.46%, to 15,126.

The trading continues last week's similar trend in the markets, as concerns over a rising yen, higher inflationary pressures in China, and U.S. subprime woes continue to keep Asian bargain hunters from buying aggressively into the dips.

"Stocks have done unbelievably well, and in some of these sectors -- even though they have good companies -- investors are waiting to see what happens," says Jeffrey Lee, chief investment officer of Philip Capital Management in Singapore.

Momentum stocks in Hong Kong refused to respond to yesterday's modest recovery, remaining mostly weaker for the day. China Mobile ( CHL) lost 0.39%, to HK$128.90, while Alibaba.com tumbled 3.7%, to HK$27.30.

In financials, China Life Insurance ( LFC) rose just 0.94%, to HK$42.90. That stock stands nearly 25% below its high for the year, reached in October.

In commodity stocks, PetroChina ( PTR) shares slipped 1.74%, to 14.70, while in Shanghai Aluminum Corp of China ( ACH) bucked the trend, rising 1.37%, to 34.81 yuan.

Also in China, Beijing announced that inflation rose to 6.5% in October, from 6.2% a month earlier. The data increases the likelihood that Beijing may raise interest rates soon, with some saying that a hike could come this weekend.

In particular, rising food costs are putting pressure on other areas of consumer spending. Beijing is expected to lift rates by 27 basis points this year.

In Japanese trading, the yen continued to rise vs. the dollar, to as high as 110.03 by the end of Asian trading.

Japan's Prime Minister Yasuo Fukuda told local journalists that the yen is rising "too fast," and warned speculators in the currency to "be cautious" about possible intervention to stabilize the yen's rise.

Many currency strategists expect a deep decline in the yen soon, which may propel buying in the Hong Kong and Chinese equity markets as the carry trade comes back into favor with hedge funds, they say.

Japanese exporters were mixed, with Sony ( SNE) up 0.95%, to 5,260 yen, and Nintendo ( NTDOY) gaining 0.51%, to 59,100 yen. Canon ( CAJ) fell back 1.28%, to 5,360 yen.

Nintendo has performed strongly this year, and is expected to start exporting the Wii to South Korea and China in January 2008.

Pranab Sarmah, regional head of technology for Daiwa Security Group, says that right now, Nintendo is one of the better buys in the region, and in Japan.

"Overall from what I have seen in Asia, Nintendo has a pretty strong supply chain right now," he says. Sarmah also recommends buying handset makers like Samsung, which he says are free from global economic jitters due to consistent demand.

"The mobile handset side is doing relatively much better than other products right now -- it's not affected by any slowdown in the U.S. market," says Sarmah.

In Korea, the Kospi gained 0.49%, to 1932, with Posco ( PKX) jumping 2.47%, to 580,000 won, and Kookmin Bank ( KB) flat at 70,000 won.

Philip Capital's Lee is keen on outlying countries in the Asia region right now, and says there is good value in the areas many Chinese and Hong Kong investors have not been looking.

"We are still bullish on Thailand, Taiwan and Indonesia," says Lee. "Some of these companies have global exposure and exposure to Asia ex-Japan -- these are the areas of interest to us."
Daniel M. Harrison is a business journalist specialising in European and emerging markets, in particular Asia. He has an MBA from BI, Norway and a blog at www.theglobalperspective.biz. He lives in New York.