Asian shares fell Tuesday for a second consecutive session as investors worried that a recent rally may be overdone, though oil prices extended gains ahead of data this week expected to show a fall in U.S. crude inventories.
The euro edged higher against the dollar, recovering from falls on Monday when Standard & Poor's became the second credit agency this year to cut Ireland's "AAA" sovereign rating.
The S&P action reinforced concerns about countries that are becoming more indebted as they spend heavily to spur flagging economic growth or rescue their financial systems. S&P had roiled markets last month after cutting its outlook on Britain's "AAA" rating to negative.
With expectations that the global economy has passed its worst already well priced in, the focus has shifted towards how any recovery will shape up, while other investors are looking longer-term and worrying about potential inflation down the line.
The euro edged higher in Asian trade, and was last at $1.3907 dollar from its dip to $1.3806 on Monday. The dollar gained 0.2 percent against a basket of major currencies. Investors were still willing to chase the rally in oil prices, however, ahead of data on Wednesday that is forecast to show U.S. crude stocks have fallen by 400,000 barrels last week, according to a Reuters poll. U.S. crude futures were trading above $68 a barrel after having touched a seven-month high above $70 on Friday.
Japan's Nikkei 225 Average fell 0.8 percent, as exporter shares such as Honda Motor ran out of steam after leading the benchmark to an eight-month closing high the previous day.
South Korea's KOSPI closed 1.5 percent lower with drops in regional markets weighing on sentiment, with losses led by key technology and steel issues including Hynix Semiconductor, down 5.5 percent.
Australian shares fell 0.9 percent as recent strong gains sparked profit taking in stocks such as BHP Billiton, but blood products group CSL jumped on news of a share buy back. CSL gained 5.2 percent after saying it would buy back up to 54.86 million shares, or about 9 percent of its issued shares.
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Hong Kong sank 1.1 percent, down for a second straight session, shedding early gains, as blue chips were sold down on worries the market had run ahead of itself in recent weeks, distorting valuations. China Huiyuan Juice retreated after the Financial Times reported that U.S. private equity fund Warburg Pincus had ended its investment in China's top juice producer, becoming the first big stakeholder to pull out of the company after the collapse of Coca-Cola's $2.4 billion takeover offer.
Singapore's Straits Times Index was up 0.6 percent. Singapore Airlines rose 4.4 percent after its CEO was quoted as saying the airline was not looking at acquisitions in China at this point in time.
China's Shanghai Composite Index was down 0.7 percent following Monday's sharp gains while worries about a near-term resumption of initial public offerings weighed on sentiment. Financial shares were mostly weaker, relinquishing some of their gains on Monday when news of a possible tie-up between Ping An Insurance and Shenzhen Development Bank helped to spur a rise that lifted the index to a fresh 10-month high. Shares in the two companies remained suspended as the market awaits confirmation of a tie-up.