Asia sluggish after Wall Street slips, dollar sags on White House woes

By Shinichi Saoshiro

TOKYO (Reuters) - Asian stocks were mostly sluggish on Tuesday following weakness on Wall Street, while the dollar sagged following news that investigators probing Russian interference in the 2016 U.S. election had charged President Donald Trump's former campaign manager.

Trump's former campaign manager Paul Manafort, and another aide, Rick Gates, were charged with money laundering on Monday by Federal investigators.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent.

Japan's Nikkei <.N225> lost 0.7 percent and South Korea's KOSPI shed 0.1 percent.

Wall Street pulled back from record-high territory on Monday, weighed down by a drop in drugmaker Merck and a report that U.S. lawmakers are discussing a gradual phase-in corporate tax cuts rather than reducing it all at once. [.N]

"The report of the gradual corporate tax cut option came when equities were strung high, so it served as a catalyst for markets to adjust," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

"Expectations were for the corporate tax to be cut in one go. But even if the cut is implemented gradually, it still is a reduction and that won't be bad news in the long term."

Markets were also awaiting official October factory and service sector activity surveys from China (0100 GMT).

The data will give global investors their first look at business conditions in China at the start of the fourth quarter, with the government's punishing war on winter smog adding to uncertainty amid early signs of a slowdown in the world's second-largest economy.

The dollar hovered near a 10-day low of 113.02 yen struck overnight.

The greenback lost about 0.4 percent against the yen overnight on investor caution following news of President Trump's former campaign manager facing charges.

The U.S. currency was also weighed down as Treasury yields slipped on news reports that President Trump is likely to appoint Federal Reserve Governor Jerome Powell, who is viewed as more dovish than other contenders, as the next head of the Federal Reserve.

The 30-year Treasury bond yield fell to their lowest in a week after Bloomberg quoted Treasury Secretary Steven Mnuchin saying the government does not see a lot of demand for ultra-long bonds.

The dollar index against at basket of six major currencies extended overnight losses and edged down 0.1 percent to 94.495, recoiling further from a three-month high of 95.150 scaled on Friday.

The euro stretched its overnight gains to trade at $1.1652 , putting further distance between a three-month low of $1.1574 set on Friday. European markets got a lift on Monday after an opinion poll showing waning support for independence soothed investors' concerns over a Catalan secession from Spain.

Crude oil prices managed to hold just below their recent peaks after being boosted by expectations OPEC-led production cuts would be extended beyond March. [O/R]

Brent crude futures was down 0.2 percent at $60.80 a barrel after rising to $61 overnight, the highest since July 2015.

U.S. crude was 0.2 percent lower at $54.04 a barrel after touching $54.46, highest since late February.

(Reporting by Shinichi Saoshiro; Editing by Kim Coghill)