A sudden drop in commodity prices prompted investors to take profits on Asian stocks on Wednesday while the US dollar held firm ahead of job data due later in the week, though the bull market in raw materials was seen as far from over.
Oil fell for a second day to near $89 a barrel, extending the previous session's 2.4% drop as investors sold off commodities after a strong year-end rally. Gold inched up, though, after sinking more than 2% on Tuesday.
Japan's benchmark Nikkei 225 closed down 0.2%, with investors largely shrugging off concerns about commodity prices and looking instead to US non-farm payrolls data on Friday to provide further evidence of a sustained economy recovery.
Profit booking by investors saw some sagging in the markets, and after a positive two-day run, on Monday and Tuesday, most of the major Asian indices closed in the red.
The Taiwan Weighted shed 1.7% to close at 8,846, while the Seoul Composite dropped marginally to end the day at 2,083.
China's Shanghai Composite, which was up 1.6% on Tuesday on a 5% jump in property stocks, and increased investor confidence due to abating inflation numbers, closed down 0.5% at 2,839.
The stronger dollar weighed on copper futures in London and Shanghai after prices slid from record highs in the previous session.
The fall in commodities to their lowest level in seven weeks and a stronger dollar weighed on shares of resource companies in Asian trade, although market analysts said it was likely to have only a limited impact.
Conversely, the Hang Seng and Straits Times closed in the green, with the Hang Seng at 23,758 up 0.4%, and the Straits Times, Singapore's stock market benchmark, saw marginal upward movement at 3,258, up 0.2%.
Western markets opened in the red on profit-taking on commodities, which saw a price-fall after a rally over the past few days, as well as a strengthening dollar, which could weaken the euro.
France's CAC 40 opened down 1% at 3,877, Germany's DAX shed 1.3% at 6,886.51, while the UK's FTSE 100 was down 0.6% at 5,977, at 2:40 pm today.
