Asian shares edged lower on Friday, hurt by disappointment that Federal Reserve Chairman Ben Bernanke gave no clues on whether a US easing was in the offer, outweighing any positive effect from China rate cuts.
Indeed, the central bank's cut, the first since the global financial crisis in late 2008, has also raised concerns about a deluge of May Chinese data due this weekend.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2%, after rising 1.7% to a one-week high and posting its biggest one-day gain since mid-January in the previous session.
Japan's Nikkei average fell 1.2%.
China surprised markets on Thursday by reducing the official one-year borrowing rate by 25 basis points to 6.31% and the one-year deposit rate by the same amount to 3.25%, in a bid to combat faltering growth in the world's second-largest economy.
The rate cuts initially pushed up global stocks, with European and some US indices gaining on Thursday.
But the positive sentiment was tempered after Bernanke gave no clues about whether the Fed will give further stimulus for the US economy when it meets June 19-20, with disappointment particularly evident in the oil and gold markets.
The dollar firmed against major currencies, inching up 0.4%, while the euro eased 0.1% to $1.2558, moving further away from a two-week high of $1.2626 hit on Thursday.
Some analysts said the US currency is likely remain strong on euro weakness even if prospects of further monetary accommodation by the Fed increase.
"We believe that the closing of short USD positions by the private sector, driven either by a rise in risk aversion or by a shift in investment sentiment in favour of US assets, will push the USD higher," said Morgan Stanley in its research note.
"With the USD remaining supported and global easing unlikely to provide sustained support to high-beta currencies, we expect the EUR/USD bearish trend to remain intact," it said.
Dimmed hopes for US stimulus sent US crude futures down more than $1 in early Asia on Friday to a low of $83.52 a barrel. Brent crude fell $1 to below $99 a barrel.
Beijing's rate cut underlined deepening concerns about the threat to worldwide economic growth from the euro zone's escalating debt problems, and followed an easing by Australia on Tuesday.
Major emerging economies, Brazil and India, have also lowered interest rates over the past month to fend off downward risks from the euro zone's crisis, fuelling expectations central banks in developed countries would also follow suit.
But the European Central Bank kept interest rates steady on Wednesday, and while Bernanke just noted "significant risks" to the US recovery from Europe's debt crisis while saying the bank was ready to act if financial troubles mounted.
Recent US data has been erratic, with the latest report on Thursday showing the number of Americans lining up for new jobless benefits fell last week for the first time since April. Payrolls in May contracted sharply, sparking a sell-off that sent assets tumbling across the board.
Spot gold was nearly flat at $1,588.06 an ounce after tumbling nearly 2% on Thursday as investors unwound bets on Fed easing expectations.
Spain remained under pressure despite selling 2.1 billion euros of fresh debt on Thursday and yields fell.
Chancellor Angela Merkel said Europe was ready to act to ensure stability in the euro zone as Fitch on Thursday cut Spain's credit rating by three notches to BBB and suggested more downgrades could come in coming months amid expectations it may soon seek EU help for banks beset by bad debts.
