Asian shares and commodities fell on Wednesday as protests in Spain underscored the country's financing challenges and investors refocused on slowing global growth as rallies, fed by major central bank easing measures, faded.
Flows were also driven by accounting calendar adjustments, with this week seeing the month-end, the end of the July-September quarter, and in Japan, the fiscal first half.
The MSCI index of Asia-Pacific shares outside Japan slid 0.8 percent to its lowest since September 14, giving back nearly all the gains made after markets across riskier assets cheered the U.S. Federal Reserve's aggressive new stimulus aimed at job creation in the U.S. economy.
The European Central Bank said earlier this month it would buy the bonds of struggling euro zone states if they requested aid, while the Bank of Japan followed the U.S. Federal Reserve example by increasing bond buying to help support the economy.
But market rallies have quickly been overtaken by concerns about deteriorating world economies.
The index's materials sector led the declines with a 1.6 percent drop. U.S. crude fell 0.2 percent to $91.13 a barrel and Brent down 0.3 percent to $110.07. London copper shed 0.5 percent to $8,237.75 a tonne.
Australian shares fell 0.4 percent, as concerns over the global economic recovery dampened China's demand for industrial metals, a major export sector for Australia.
"The reason that these packages have to be pursued is because the underlying level of industrial production and economic growth is very weak," said Ben Lyons, an investment analyst at ATI Asset Management.
China's central bank said on Tuesday it will "fine tune" policy to cushion the economy against global risks while closely watching the possible impact from global policy loosening.
China cut interest rates twice in June and July and lowered banks' reserve requirement ratio three times since late 2011, but has refrained from cutting interest rates or RRR since July.
Tokyo's Nikkei average slipped 1.7 percent to a two-week low, as a mass of stocks passed the deadline for buyers to gain rights to first-half dividends.
The falls follow an easing in global stocks and a drop in the euro to a near two-week low of $1.2886 on Tuesday. The CBOE Volatility index, a gauge of expected volatility in the Standard & Poor's 500 index, hit its highest in about two weeks on Tuesday, reflecting rising investor caution.
A further drop in Japanese stocks could fuel speculation about yen-weakening intervention by Japanese authorities to help shore up first-half book closing, keeping traders wary of testing the dollar's downside against the yen, said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
"Selling and buying forces both lack strong momentum, but the market is biased towards selling, with the euro capped by its own problems and the dollar top-heavy against the yen," he said.
The euro could slip briefly below 100 yen while heavy bids placed at 77.50 yen against the dollar may spur a blip above 78 yen, Saito said.
The yen traded at 77.72 yen, near a one-week high of 77.655 hit on Tuesday, and was at 100.30 against the euro. The euro steadied at $1.2905, but stayed pressured.
Eventful week for Spain
Protests flared up in Spain on Tuesday ahead of the planned announcement of a new round of unpopular austerity measures for the 2013 budget on Thursday. Spain will also likely set a fresh timetable for economic reforms later this week.
Markets are closely watching Madrid's ability to control its finances, with ballooning regional debts crippling the government's refinancing efforts. The country is also subject to a ratings review by Moody's Investors Service.
Prime Minister Mariano Rajoy is holding back from seeking a sovereign bailout, which would set the stage for the ECB to start buying high-yielding Spanish bonds to ease the country's borrowing strains.
European news and economic data may provide daily trading incentives but markets will largely stick to recent ranges as investors are unwilling to bet on direction until the U.S. presidential election on November 6, said Goro Ohwada, president and CEO at Japan-based fund of hedge funds, Aino Investment Corp.
"Unless it becomes clear which camp is going to win, and unless there is a significantly bad news, nobody's going to take the risk of hastily bailing out of markets. Rather, they are trying to bring their positions close to neutral so they can move quickly after the election result," he said.
Asian credit markets weakened along with other markets, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 6 basis points.
