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Asian equities fell on Tuesday as the spotlight remained on China and its efforts to stabilise its stuttering post-pandemic economy, while traders awaited the outcome of a policy meeting of the Reserve Bank of Australia.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.75% lower at 511.14, moving away from 515.37, the highest level since Aug. 11 it touched on Monday.

China shares clocked their best day in over a month on Monday on the back of fresh measures to help boost the faltering economy. On Tuesday, China's blue-chip CSI 300 Index fell 0.40%, while Hong Kong's Hang Seng Index slipped 0.88%, giving back some of the gains.

A private-sector survey showed on Tuesday China's services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world's second-largest economy and stimulus failed to meaningfully revive consumption.

"The miss in China's Caixin services PMI has offset some of the sentiment shift we got yesterday," said Charu Chanana, market strategist at Saxo in Singapore.

Investors are hoping that the drip feed of policy stimulus from Beijing will be enough to stabilise the Chinese economy.

"To be fair, China’s measures so far are a mere relaxation of over-regulation that can merely stop or slow down further damage, and not particularly stimulus actions that can reverse the damage," Chanana said.

"The hustle between weak high-frequency data and policy actions is likely to continue."

Investor focus will also be on China's largest private property developer, Country Garden. The company faces a deadline for making interest payments on two U.S. dollar bonds on Tuesday, days after dodging an onshore debt default with a last-minute payment extension deal.

Australia's S&P/ASX 200 index fell 0.62% ahead of the policy decision from the country's central bank. The RBA is expected to stand pat on interest rates, according to a Reuters poll of economists.

With the recent decline in inflation and a slight rise in unemployment in Australia, all but two of 36 economists polled by Reuters said the RBA would hold its official cash rate at 4.10%, in line with interest rate futures pricing.

Economists though largely expect a final hike before the end of the year.

"While the chances of another and almost certainly final rate hike have diminished, we aren’t totally ruling out one more before the year-end," ING economists said in a note.

The Australian dollar fell 0.11% to $0.645.

The U.S. markets were closed on Monday, leading to light trading volume. While the economic calendar in the region is bare, several Federal Reserve officials are due to speak during the week.

Data on Friday showed U.S. job growth picked up in August, but the unemployment rate jumped to 3.8%, while wage gains moderated. The slight cracks in the labour market further bolstered expectations that the Fed is likely done hiking rates.

Markets are pricing in 93% chance of the Fed keeping rates unchanged later this month, CME FedWatch tool showed, and has priced in about 60% chance of no more hikes this year.

European Central Bank President Christine Lagarde said central banks must pin inflation expectations at their targets at a time when changes in the labour and energy markets as well as geopolitical turmoil cause some price swings.

"It will be critical for central banks to keep inflation expectations firmly anchored while these relative price changes play out," Lagarde told an event in London on Monday.

The market is now leaning against a hike at its September meeting after a run of soft data.

In the currency market, the dollar index, which measures the U.S. currency against six rivals, fell 0.019%, with the euro down 0.03% to $1.0791.

The Japanese yen weakened 0.03% to 146.53 per dollar, still at the levels that led to intervention from Japanese authorities last year.

In commodities, U.S. crude rose 0.41% to $85.90 per barrel and Brent was at $88.95, down 0.06% on the day. [O/R]