[HONG KONG] Asian stock markets mostly fell on Wednesday after a two-day rally and strong US data that fuelled talk of an interest rate rise, while Tokyo swung back and forth following a better-than-forecast economic growth reading.
The world's number three economy expanded 0.4 per cent in the first three months of the year, boosted by a pick-up in consumer spending, or a 1.7 per cent annualised rate.
The country's benchmark Nikkei stock index spent much of the day in positive territory. But the upbeat figure was offset by fears it could allow the Bank of Japan to delay any fresh stimulus.
Stimulus bets "may be drying up a little", Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management Co in Tokyo,told Bloomberg News.
"If the ... growth figure was a small increase, we might have seen more hopes for supportive policy, but with the data being better than expected the view now is the size of the policy package may not be that significant."
Shares ended 0.1 per cent lower, with profit-taking also a factor after the market rose for six of the previous seven sessions.
The figures come days after local media reported that Prime Minister Shinzo Abe plans to delay a sales tax rise next year over concerns it could damage the already fragile economy.
A tax rise in 2014 - seen as key to helping pay down Japan's enormous national debt - was blamed for ushering in a brief recession.
Most other regional markets also retreated after a sharp sell-off on Wall Street on Tuesday.
US traders ran for cover after news that industrial production, consumer prices and housing starts all rose in April - fuelling speculation the Federal Reserve could raise borrowing costs as soon as next month.
The US central bank earlier this year said it would not raise rates again - after December's first hike in almost a decade - unless the world's top economy was showing signs of good health.
However, there has been talk in recent weeks that Fed policymakers would consider tightening at their June meeting, jolting investor confidence.
Worries about the possibility of higher rates, coupled with sharp losses on Wall Street's three main indexes, seeped into Asia where most stock markets fell.
Hong Kong was down 1.7 per cent in the afternoon, while Sydney ended 0.7 per cent lower and Shanghai gave up 1.3 per cent by the close. Seoul slipped 0.6 per cent and Singapore was 0.3 per cent off.
On currency markets the talk of a US rate rise lifted the dollar to 109.31 yen in the morning from 109.13 yen in New York but it later eased to 109.12 yen.
The greenback seesawed as traders considered whether the Bank of Japan would stand pat on monetary easing, which tends to lead to a stronger yen.
Energy firms again rode on the coat-tails of a crude rally, which has seen both main contracts push towards the US$50 mark.
Brent was up 0.1 per cent at US$49.31 and West Texas Intermediate gained 0.2 per cent to US$48.39 as wildfires in Canada forced the evacuation of workers and the closure of the operations of the country's biggest oil company.
In Tokyo automaker Suzuki slumped 15 per cent at one point on reports that it may have used improper fuel-efficiency testing, the latest bad news for a car industry shaken by scandals over deadly defects and emissions cheating.
The firm managed to pare the losses slightly to end 9.4 per cent lower.