By Chris Oliver, MarketWatch , Colin Ng HONG KONG (MarketWatch) -- Asian stock indexes ended mixed Tuesday, with Chinese shares led down by property and financial stocks amid investors' concerns that Saturday's interest-rate increase could be the first of a series of rounds of tightening by Beijing. "Suddenly the possibility is open that there could be two more hikes or three more hikes," said Robert Howe, chief executive officer of hedge fund Geomatrix in Honolulu, referring to the potential for further policy announcements by the People's Bank of China. "The market perception has changed." He said that most investors were not expecting Chinese authorities to raise rates again before year's end and that selling over the past two days reflected adjustments of such measures on expected corporate earnings. The Shanghai Composite Index dropped 1.7%, adding to the previous session's 1.9% slide, to end at its lowest closing level in nearly three months. Japan's Nikkei Stock Average fell 0.6%, and South Korea's Kospi Composite was 0.6% higher in late trade Hong Kong's Hang Seng Index dropped 0.9% in its first trading session following the extended weekend break. Taiwan's main index lost 0.2% and India's Sensex was little changed in late action. Markets in Australia and New Zealand were shut for a holiday. In Japan, the major indexes were in the red throughout the duration of trading, pressured by the yen's strength against the U.S. dollar and weighed by U.S. stocks' weaker session Monday in New York. One analyst said that while the yen's strength in recent sessions was holding back investor sentiment, the Japanese currency was unlikely to rally back to its 80-pairing to the U.S. dollar seen in October. Mizuho Investors Securities senior strategist Masatoshi Sato said selling was limited by the government's industrial-output forecasts just before the market opened. The reports projected a 3.4% rise in December and a 3.7% gain in January. "This data will alleviate concerns that the Japanese economy, now at a standstill, will decline further," he said. Japan's core consumer-price index in November fell 0.5% from a year earlier, compared with a projected fall of 0.6% in a Dow Jones Newswires and Nikkei poll of economists. Industrial production in November rose 1% from the month before, in line with expectations. HSBC Securities chief economist Seiji Shiraishi said the CPI data showed Japan was still in a strong deflationary trend. He added that it would be hard for Japan to overcome deflation given factors such as its declining population. However, "deflation may ease (in coming months) if the global economic conditions prove strong" and "help Japan's external demand, leading to a rise in domestic demand," he said. Among major exporters, Canon (CAJ) lost 1.7% and Honda Motor (HMC) dropped 1.1%. Mizuho Financial Group (MFG) added 1.3%, supported by President and Chief Executive Takashi Tsukamoto's comments in a Dow Jones Newswires interview that the company's efforts to meet capital-adequacy requirements were progressing and there was no need to issue additional new shares. In Shanghai, concerns over the policy outlook were highlighted by a report Tuesday that cited a central bank adviser, Li Daokui, as saying China must introduce further tightening measures in 2011 -- particularly in the first half -- to rein in rising inflation. China Vanke , the nation's largest property developer by market share, declined 4.8% in Shenzhen, and Poly Real Estate Group fell 6.2% in Shanghai. Financial stocks were also weak in Shanghai, with securities firms leading declines as investors gauged their outlook in light of tighter policy. Citic Securities lost 2.1% and Everbright Securities fell 3.1%. In Hong Kong, Chinese property developers, which depend on bank lending to finance their projects, led the decline. China Overseas Land (0688.HK) fell 2.3%. "This latest interest-rate hike underlines the [Peoples Bank of China's] continued determination to contain rising inflationary risks," HSBC wrote in a note. In Seoul, heavyweight technology plays were mostly higher. Samsung Electronics (SSNHY) gained 1.7% and Hynix Semiconductor (HXSCF) rose 3.7%. Meanwhile construction-related stocks were higher on hopes for an improvement in earnings next year. Daewoo Engineering & Construction rose 5%. In spite of the positive session, one analyst said there was limited fuel for further gains in the Kospi as many traders have closed positions and moved to the sidelines for the remainder of the year. Elsewhere in the region, Philippine shares were basically flat, dropping 0.1%, Malaysian shares gained 0.4%, and Singapore's Straits Times Index rose 0.8%. Thai shares rose 0.8% in late trading. In foreign-exchange markets, the dollar was at 82.31 yen, against 82.84 yen in late New York trade Monday. The euro was at $1.3227 versus $1.3147, and 108.79 yen against 108.88 yen. Spot gold was at $1,390.70 a troy ounce, up $6.60 from its New York close Monday while February Nymex crude-oil futures were up 11 cents at $91.11 a barrel.