Asian shares rebounded on Wednesday after Federal Reserve Chairman Ben Bernanke confirmed his commitment to monetary easing. Stocks in Tokyo however, bucked the trend as a strengthening yen dealt exporters a blow.
Overall market sentiment remained frail a day after Italy's inconclusive elections re-ignited fears of a euro zone financial crisis. A sale of 10-year Italian government bonds later in the day meanwhile could be test of investor sentiment in the wake of the elections.
"While (coalition) discussions continue, markets will remain nervous, as this is threatening to unravel 15 months of austerity measures and pull Italy back towards the brink," Jason Hughes, head of premium client management at IG Markets, said in a note.
Worries about U.S. spending cuts that will take effect on Friday unless lawmakers can reach a budget deal also tempered gains in equity markets.
A second straight day of declines in Tokyo saw the Nikkei retreat further from Monday's 53-month peak of 11,662, while Shanghai traded near one-month lows. In contrast, positive earnings news helped Australia's S&P ASX 200 move closer to last week's four-and-a-half year high.