Asian markets pared back earlier losses Thursday to give a mix performance, though prospects of higher inflation and a weak U.S. economy kept investors cautious. Japan and Australia both managed to close in positive territory.
The euro, aided by a surprise improvement in German business sentiment, hit a one-month high. Against the yen, the dollar plumbed its lowest in 10 days, moving as low as 102.76 yen. The dollar's weakness only added to the appeal of crude oil , which powered to a fresh record of $135.04 a barrel after U.S. stocks of crude oil, which analysts had expected to swell by 600,000 barrels in the week to May 16, instead dried up to the tune of 5.4 million barrels, reaching 320.4 million.
Airline stocks such as Cathay Pacific, Korean Air and Qantas took a hit on surging crude oil prices, while energy firms such as Australia's Woodside Petroleum and Japan's Nippon Oil bucked the downward slide across Asia.
Tokyo's Nikkei 225 Averageclawed its way up into positive territory, rising 0.4 percent as Chiyoda gained on a brokerage upgrade while energy-related stocks came in favor after crude oil breached the $135 level.
Seoul shares finished lower, led down by tech and transportation issues such as LG Display and Hynix Semiconductor, on worries energy price hikes will hurt consumer sentiment and corporate profits. The KOSPI closed down 0.65 percent to post its fourth consecutive losing session, but trimmed earlier losses of near 2 percent.
Australia's S&P/ASX 200 Index edged up 0.1 percent, reversing an earlier fall, as record oil
prices lifted resource firms such as Newcrest Mining, though ongoing worries about a slowing U.S. economy limited overall gains.
Hong Kong stocks were down 1.6 percent as mounting worries over the health of the U.S. economy rattled investors and record high oil prices hit shipping and aviation companies. China Eastern Airlines, China Southern Airlines and Air China all plunged.
China's Shanghai Composite Index pared back the morning session's sharp losses, but closed 1.7 percent lower. PetroChina, the most heavily weighted stock, slid as the market discounted rumors of a possible fuel price hike while other large caps were sluggish. The SCI had risen 2.9 percent on Wednesday, led by a 6.6 percent jump in PetroChina on speculation that Beijing may raise state-set fuel prices or take other steps to aid oil refiners, which have been squeezed by surging crude oil prices. But the official Shanghai Securities News reported on Thursday that China would not deregulate fuel prices anytime soon because the government's priorities were curbing inflation and carrying out earthquake relief.
Singapore's Straits Times Index was 1.1 percent lower with financial counters such as DBS Group and United Overseas Bank leading the declines. But shares of rig-makers such as Sembcorp and Keppel Corp made firm gains.