Asian markets were mostly down Thursday on signs the US Federal Reserve could soon start tapering off its massive stimulus measures, though Tokyo stocks rose after the yen fell against the dollar.
Markets took their lead from Wall Street where stocks fell after Federal Reserve chief Ben Bernanke told Congress the Fed could scale back stimulus measures if economic conditions improved.
However, with the yen weak against the dollar, Tokyo stocks were up 0.23 percent in morning trade.
Sydney was down 1.81 percent, Seoul was off 0.54 percent, Shanghai was 0.43 percent lower and Hong Kong slid 1.56 percent.
"Fed Chairman Bernanke's remarks caused jitters among global investors," said Peng Yunliang at Shanghai Securities.
Bernanke stressed that current economic conditions did not warrant an end to the Fed's aggressive stimulus measures, and US stocks had rallied during the early part of Bernanke's highly anticipated testimony.
But he told lawmakers the Fed could start reducing its $85 billion-a-month bond-buying programme at one of the next few meetings. Stocks took a decisive lurch with the release of Federal Reserve meeting minutes that showed some officials had discussed curtailing bond purchases as soon as June.
Tokyo's benchmark Nikkei 225 index, which closed at its best level in more than five years Wednesday, continued to rise on a weak yen, which boosts exporters.
"An earlier-than-expected end to US easing operations is a definite negative," said Hiroichi Nishi, general Manager of equities at SMBC Nikko Securities.
"But this is balanced somewhat by the fact that it shows that the US economy is judged to be on a sound enough footing to allow this to happen," he said.
He noted "the immediate benefit for Japan shares is the weaker yen", adding that the market could see some profit-taking.
In China, in another sign of the weak recovery in the world's second-largest economy, manufacturing activity in May contracted for the first time in seven months, HSBC's Preliminary Purchasing Index (PMI) showed.
The index fell to 49.6 from a final 50.4 in April, putting it below the 50 mark that indicates contraction.
"The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds," said Qu Hongbin, HSBC's economist in Hong Kong.
The dollar was fetching 103.39 in Asian morning trade, against 103.31 yen late Wednesday in New York where the greenback rose on Bernanke's comments.
The euro was at 132.51 yen from 132.58 yen and $1.2838 from $1.2855.
Oil extended its losses in Asian trade, with New York's main contract, light sweet crude for delivery in July dropping 58 cents to $93.70 a barrel and Brent North Sea crude for July delivery shedding 47 cents to $102.13.
Gold was at $1,367.60 at 0330 GMT from $1,384.40 late Wednesday.
-- Dow Jones Newswires contributed to this report --
