Asia's key stock indexes fell Tuesday, with China's Shanghai Composite Index closing 3.5 percent lower, after selling gathered pace in the afternoon trading session.
Chinese investors took the opportunity to cash in recent gains in the absence of leads to move the market higher, sending the Shanghai index sharply lower by the close.
Markets largely shrugged off the strong session on Wall Street which saw the Dow surging to 13-month highs overnight. News that UK banking group Lloydswill raise $22 billion in new equity at a 60 percent discount weighed on sentiment.
All three U.S. indices gained more than 1 percent after news that sales of previously owned U.S. homes rose to their highest in more than 2-½ years last month, helping to allay worries about the sector sparked last week when another report showed housing starts fell sharply in October.
Investors turned cautious in the Asian session, ahead of revised third-quarter U.S. GDP numbers and a U.S. consumer confidence report later today, for further clues on the strength of the U.S. recovery.
Japan's Nikkei Average fell, led down by bank stocks and exporters. The benchmark index fell to 9,401.58 while the broader Topix lost 1.1 percent to 829.22 yen. Tokyo markets were closed for a holiday on Monday.
Sony fell 1.24 percent and Toyota shed 1.7 percent, hurt by a stronger local currency as the dollar stayed near a six-week low of 88.60 yen hit the previous day.
Japan Airlines slumped 8.4 percent to a record low 87 yen, after trading house Mitsui & Co confirmed a media report that it had sold all of its shares in the struggling carrier. Bankruptcy fears also weighed on JAL shares amid uncertainties if the airline could secure a deal with employees to cut pension payouts.
Financials came under pressure on persistent worries that more financial firms would need to raise capital after the country's largest bank, Mitsubishi UFJ, announced a large fund raising.
No. 3 bank Sumitomo Financial shed 4.4 percent, Mizuho Financial declined 1.9 percent. Mitsubishi UFJ dropped 2.7 percent.
Takefuji lost 6.8 percent after Moody's downgraded the consumer finance company's long-term debt by two notches.
South Korea's Kospi gave up earlier gains to close 0.8 percent lower at 1,606.9 points.
Banking and tech issues led the decline as foreigners and institutions continued to lock in recent gains.
Big tech exporters weighed on the market, with Samsung Electronics down 2.2 percent and Hynix Semiconductor shedding 2.3 percent.
Banking stocks saw significant losses. Woori Finance slipping 2.18 percent after a block sale of its shares by Korea Deposit Insurance Corp (KDIC). Hana Financial pared losses to end down 2.8 percent.
Daewoo Engineering & Construction declined 5.4 percent on news an Abu Dhabi fund-led consortium and a group including a U.S. builder were picked as preferred bidders to buy a controlling stake in the construction unit.
But Samsung Engineering climbed over 2 percent before paring gains to 0.85 percent, on news it won a 1.4 trillion won ($1.22 billion) order from the United Arab Emirates.
The Australian market retraced its steps, slipping 0.7 percent as investors took profits in banks and resource stocks following recent rallies.
The benchmark S&P/ASX 200 fell 32 points to 4,685.0, after advancing 0.9 percent earlier in the session and 0.7 percent on Monday.
Harvey Norman rose 0.6 percent after the retailer on late Monday gave an upbeat forecast, saying its six-month profit could be more than 40 percent higher than a year earlier.
Babcock & Brown Infrastructure stapled securities resumed trading on a deferred settlement basis after a $1.7 billion recapitalisation.
The revived company, which will be renamed Prime Infrastructure, was trading at A$4.50, compared with its last trade at A$0.035 on Nov. 9. It will trade as Prime from Dec 7.
Hong Kong's Hang Seng Index fell 1.5 percent to 22,423.1 points.
TCL Communication fell 2.2 percent, after the mobile handset maker said it would seek shareholder approval for a rights issue.
Chinese banks fell on jitters that China's banking regulator may want big state lenders to raise their capital adequacy ratio. Bank of China fell 1.3 percent, ICBC was flat and China Construction Bank shed 1 percent.
Taiwan's Taiex eked out gains of 0.36 percent, after the island's export orders in October rose from a year earlier for the first time in 13 months.
Export-dependent firms such as Hon Hai advanced 0.7 percent.
In Southeast Asia, markets in Singapore and Malaysia lower. The STI slipped 0.6 percent while the KLCI was flat.
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