By Selena Li

HONG KONG (Reuters) - Asia stocks mostly held firm on Tuesday, despite weaker-than-expected Chinese economic data, with Japan's broad share index hitting a 33-year high on a rally in chipmakers following U.S. tech sector gains.

Anticipation of a softening dollar also cushioned emerging markets, although investors were wary of crucial U.S. government debt-ceiling negotiations, with a little more than two weeks to go before the government could run short of money to pay its bills.

Japan's was up 0.5% to 2,125.45 in afternoon trade, after earlier hitting 2,126.14, its highest since August 1990. The index climbed 0.78% to 29,858.

In the U.S. overnight, Meta Platforms Inc (NASDAQ:) climbed 2.16% as one of the top boosts to both the Nasdaq and after a broker's upgrade to "buy".

China's industrial output grew 5.6% in April from a year earlier, accelerating from the 3.9% pace seen in March and marking the quickest growth since September 2022, data showed on Tuesday. But it was well below expectations for a 10.9% increase in a Reuters poll of analysts.

Retail sales also missed expectations, and, coming against a backdrop of China's weak industrial, credit growth and import indicators, highlighted a wobbly post-COVID recovery.

With the softer readings, the market expects the policy response to try and shore up the economy and ensure that corporate confidence is back and growth is more sustainable, said Kerry Craig, a global market strategist with JPMorgan (NYSE:).

MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.32% higher.

"The market is thinking that the Fed is done (with rate hikes) and the U.S. dollar is going to come down a little bit so that supports the markets in Asia," Craig said.

The fell 0.029%, with the Japanese yen strengthening 0.10% versus the U.S. currency at 135.98 per dollar.

Sluggish manufacturing data from New York State on Monday raised concerns about a slowing U.S. economy that could help bring down inflation, helping the case for the Federal Reserve to pause on rate hikes.

Benchmark 10-year notes fell 2.1 basis points to 3.4831% on Tuesday.

China's benchmark stock index dropped 0.22%. Hong Kong's pared early gains to edge up only 0.15%, with the tech gauge keeping the momentum from Monday's rally and climbing 0.93%.

Australia's , however, lost 0.42%, dragged down by losses in gold and technology stocks, as traders awaited minutes of the central bank's last policy meeting to assess the trajectory of interest rate hikes.

rose 0.41% to $71.40 per barrel and was at $75.57, up 0.45% on the day.

dropped 0.21% to $2,016.48 an ounce.