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Asian shares caught Wall Street's gloom on Wednesday, while the dollar was on track for a sixth losing session against the yen after the Bank of Japan upgraded its view on capital expenditure.
The shadow was likely to fall over the European open, with financial spreadbetters expecting Britain's FTSE 100 to open down 0.2%, Germany's DAX off 0.3%, and France's CAC 40 down as much as 0.4%.
"Following a session of minimal economic data and dismal retail earnings from both sides of the pond, European markets look set to open lower," Jasper Lawler, market analyst at CMC Markets, wrote in a note to clients.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.1%, after US stocks fell in a broad selloff.
Asian investors continued to keep a wary eye on the situation in Thailand, where the army declared martial law on Tuesday after months of civil and political unrest.
Japan's Nikkei stock average ended down 0.2%, as investors awaited post-meeting comments by Bank of Japan Governor Haruhiko Kuroda from 3:30 pm (0630 GMT), after the Tokyo market close.
The BOJ held policy steady as expected at the conclusion of a two-day meeting and maintained its overall upbeat economic assessment while raising its capex view.
"The market is already jittery about falling US bond yields leading to a weak dollar-yen. Kuroda's comment dismissing the possibility of further easing again won't do any good to the mood," said Hiromichi Tamura, chief strategist at Nomura Securities.
Japanese trade data for April released shortly before the market opened showed that the country posted a record 22nd month of trade deficits. While last month's rise in exports beat forecasts, shipments to the major US market slowed.
The dollar lost about 0.1% against the yen to 101.22 yen, not far from Monday's low of 101.10 yen, which was its weakest level since early February.
The recent downtrend in US Treasury yields continued to undermine the dollar's appeal.
The yield on benchmark US 10-year notes inched up to 2.51% in Asia from its US close of 2.50% on Tuesday, but remained close to half-year lows.
Later on Wednesday, the US Federal Reserve will release the minutes of its latest policy meeting, though most market participants did not expect any substantial clues to emerge on the timing of a future hike to interest rates.
New York Federal Reserve President William Dudley said at an event on Tuesday that the US central bank will likely be "relatively slow" in hiking interest rates.
The euro was steady on the day at $1.3706, but remained not far from a nadir of $1.3648 touched on Thursday, which was its lowest since late February.
In commodities trading, US crude rose 0.5% to $102.85 per barrel, supported by a disruption in Libya's oil output and an unexpected draw in US crude oil inventory, according to industry data.
Spot gold was steady on the day at $1,293.80 an ounce.
