Asian stocks made a positive start Wednesday following gains on Wall Street but lost momentum as factory gate prices in China fell for the first time in nearly two years.
Shares in Tokyo and Hong Kong rose at the open, with the United States bracing for a tense night of midterm election results.
But they dipped in mid-morning trade after official data showed the world's second-largest economy languishing under Beijing's strict zero-Covid policy.
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Markets had climbed in New York and Europe on Tuesday as polls opened in crucial US elections that will shape the political fortunes of President Joe Biden.
Biden's Democrats are facing a gargantuan struggle to hang onto control of Congress, and a Republican victory could pave the way for a White House comeback bid by Donald Trump.
Such a result could also lead to political deadlock in Washington -- a prospect welcomed by investors "as it prevents any significant shifts in policy," according to Scope Markets analyst James Hughes.
At the same time, market players are eying US inflation data due on Thursday, causing the dollar to retreat, said Edward Moya, senior market analyst at OANDA.
"The dollar got crushed today as a short-covering move accelerated as investors embraced risk appetite ahead of the midterm elections and Thursday's pivotal inflation report," he said in a note late Tuesday.
Tokyo was down 0.2 per cent at the break, while Hong Kong lost 0.1 per cent in morning trade, with Shanghai up 0.3 per cent.
Other Asian markets were mostly higher, with Taipei up 1.4 per cent, Seoul gaining 1.1 per cent and Singapore up 0.3 per cent. Sydney rose 0.6 per cent while Jakarta was flat.
Speculation over how long Beijing will stick with its harsh lockdown-and-testing policies designed to stamp out Covid-19 has fuelled volatility in Chinese markets in recent days.
Official data showed Wednesday that China's producer price index (PPI) fell by 1.3 per cent on-year in October, pushing it into negative territory for the first time since December 2020.
The consumer price index (CPI) -- the main gauge for retail inflation -- rose by 2.1 per cent on-year in October, moderating slightly from September's two-year high of 2.8 per cent.
Some stocks turned negative after "China inflation data printed a rather gloomy picture, with PPI remaining deflationary and CPI much weaker than expected, pointing to waning demand," Stephen Innes of SPI Asset Management said in a note.
"Rolling lockdowns in China, as Covid cases rebound, are catching oil traders leaning the wrong way," he added. Both main crude indexes were down more than 2.5 per cent.
Key figures around 0230 GMT
Tokyo - Nikkei 225: DOWN 0.2 per cent at 27,827.16 (break)
Hong Kong - Hang Seng Index: DOWN 0.1 per cent at 16,539.83
Shanghai - Composite: UP 0.3 per cent at 3,072.68
Pound/dollar: UP at $1.1544 from $1.1468 on Tuesday
Euro/dollar: UP at $1.0074 from $1.0005
Dollar/yen: DOWN at 145.465 yen from 146.26 yen
Euro/pound: UP at 87.28 pence from 87.23 pence
West Texas Intermediate: DOWN 3.3 per cent at $88.79 per barrel
Brent North Sea crude: DOWN 2.6 per cent at $95.32 per barrel
New York - Dow: UP 1.0 per cent at 33,160.83 (close)
London - FTSE 100: UP 0.1 per cent at 7,306.14 (close)
