Markets mostly dipped Wednesday, following a downbeat lead from Wall Street as investors braced for Fed boss Jerome Powell's testimony to the US Congress.
The retreat extended a subdued start to the week, with investors unimpressed by China's efforts to boost its economy, including a fresh interest rate cut that was smaller than expected.
All three major US indices as well as the top European markets closed in the red on Tuesday, and Asian investors picked up the baton in a similar mood.
Hong Kong sank more than one per cent and has now given back all the gains made in last week's rally, while Shanghai was more than one per cent down.
There were also losses in Sydney, Wellington, Seoul, Manila, and Bangkok, though Tokyo, Singapore, Taipei, and Mumbai chalked up gains.
London sank as data showed UK inflation unchanged last month, confounding forecasts for a drop. The figures come a day before the Bank of England is expected to hike interest rates again as it struggles in its battle against aggressive price rises.
Paris and Frankfurt opened lower.
All eyes are on Washington, where Fed Chair Powell will make a semiannual appearance before Congress.
His comments will be closely scrutinised for clues about the direction of the Fed's campaign to fight soaring inflation with interest rate hikes.
"He will come on and try to remain hawkish," ANZ Bank's Mahjabeen Zaman told Bloomberg Television, saying there was still a risk of further hikes.
The US central bank last week held rates steady after 10 straight increases, but signalled more hikes to bring prices under control.
The anxiety over Powell's testimony built on top of disappointment on market floors this week with Beijing's moves to try and revive the Chinese economy.
