Asian markets have mostly retreated following losses on Wall Street as dealers awaited a meeting of the US Federal Reserve policy committee hoping for a fresh round of stimulus measures.
Attention was also on Germany, where a court is due to rule on the constitutional legality of Berlin taking part in a rescue fund set up to support under-pressure countries.
Tokyo on Tuesday fell 0.70 per cent, or 61.99 points, to 8,807.38, Sydney's S&P/ASX 200 closed 0.18 per cent, or 8.0 points, lower at 4,325.8 and Seoul lost 0.24 per cent, or 4.70 points, to close at 1,920.00.
Shanghai ended down 0.67 per cent, or 14.34 points, at 2,120.55 but Hong Kong staged a late rally to close 0.15 per cent higher, adding 30.70 points to 19,857.88.
"Recent weak economic data has led some to expect further stimulus, so investors are behaving cautiously until they see more policy signals," Everbright Securities analyst Zeng Xianzhao told Dow Jones Newswires.
Euphoria has eased after Friday's announcement from the European Central Bank that it will buy the sovereign bonds of debt-hit nations.
As global markets anticipated a rapid international rescue for Spain, the eurozone's fourth-biggest economy, Prime Minister Mariano Rajoy refused to be rushed into a deal that dictates spending cuts or touches old-age pensions.
The Fed's meeting has now become the main focus with hopes that its chief, Ben Bernanke, will unveil a third round of bond-buying, or quantitative easing, to kick-start the US economy, which has seen a stuttering recovery from the global downturn.
Those expectations were given more impetus on Friday following a disappointing set of job figures.
With dealers taking a wait-and-see approach, Wall Street tacked back on Monday. The Dow finished down 0.39 per cent, the S&P 500 dropped 0.61 per cent and the Nasdaq shed 1.03 per cent.
"Equity markets globally are consolidating after a pretty good run-up since late last week," John Milroy, investment adviser at Macquarie Private Wealth in Australia, said.
US indexes were also hurt by the Fed's announcement that consumer credit fell in July after 10 months of gains, raising concerns about confidence while unemployment remains high.
On currency markets, the European unit bought Y100.10, compared with Y99.86 late on Monday in New York, while it also fetched $US1.2795 compared with $US1.2758 in US trade.
The dollar was at Y78.19, from Y78.27.
German judges are expected to rule on Wednesday on whether the eurozone's 500 billion-euro ($A620.81 billion) rescue fund, the European Stability Mechanism (ESM) and the EU fiscal pact are compatible with the country's constitution.
The verdict is the last legal hurdle for the ESM before it can come into effect. While the verdict is expected to be positive, there are fears a decision against it could blow the whole eurozone project apart.
Traders took some comfort from news out of Germany that the court would not delay its decision following a last-minute legal challenge by a leading eurosceptic politician in the wake of the ECB's bond-buying program.
New York's main contract, light sweet crude for delivery in October, fell 5 US cents to $US96.49 a barrel and Brent North Sea crude for October was 7 US cents lower at $US114.74.
Gold was at $US1,730.70 at 1800 AEST, compared with $US1,732.83 on Monday.
In other markets:
- Taiwan's weighted index edged up 2.39 points, or 0.03 per cent at 7,485.13.
Taiwan Semiconductor Manufacturing Co rose 1.08 per cent at $Tw84.4 while Hon Hai Precision added 1.80 per cent at $Tw90.4.
- Manila ended flat, nudging down 4.76 points to 5,186.05.
BDO Unibank eased 0.59 per cent to 59.25 pesos and Megaworld fell 1.37 per cent to 2.16 pesos.
- Wellington closed up 0.48 per cent, or 18.05 points, at 3,744.96.
Fisher & Paykel Appliances was up 7.22 per cent at $NZ1.04.
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