Tokyo fell 0.86% after Japan reported a wider-than-expected trade deficit in July as exports to Europe and Asian neighbours plunged, sending the yen a bit lower amid a continued shift away from the safe haven currency.
Hong Kong was down 0.84%, Seoul slipped 1.30%, Shanghai fell 0.56% and Sydney was 0.18% lower.
European stock markets rebounded and the euro jumped back above US$1.24 overnight as investors remained hopeful of central bank action over the eurozone crisis and cheered Spain’s latest debt auctions.
The markets had lost ground on Monday after Germany and the European Central Bank dampened rumours of intervention to drive down borrowing costs.
Markets were also buoyed by news that Spain sold 4.51 billion euros (US$5.62 billion) of short-term debt in an auction that was larger than planned, with the closely-tracked eurozone nation benefiting from lower interest rates.
Investors were also keenly watching Greece which embarks on an uphill diplomatic battle this week to convince European partners to extend a deadline for spending cuts to keep the floundering nation in the 17-nation eurozone.
Prime Minister Antonis Samaras will Wednesday start meetings in Athens with Eurogroup chief Jean-Claude Juncker and European Commission head Jose Manuel Barroso.
US stocks slipped overnight despite the upbeat news from Europe, unable to maintain early gains as tech stocks dragged on sentiment.
The Dow Jones Industrial Average slid 68.06 points (0.51%) to finish at 13,203.58. The S&P 500-stock index fell 4.96 points (0.35%) to 1,413.17, while the tech-rich Nasdaq dropped 8.95 (0.29%) to 3,067.26.
The euro bought US$1.2465 and 98.76 yen in Tokyo morning trade, compared with US$1.2470 and 98.84 yen late yesterday in New York where the beleaguered currency rose on speculation that the eurozone’s debt crisis may be on the mend.
The dollar was at 79.22 yen against 79.27 yen in US trade.
In oil markets, New York’s main contract, light sweet crude for October delivery, gained five US cents to US$96.89 a barrel and Brent North Sea crude for delivery in October added 10 US cents to US$114.74.
Gold was at US$1,638.70 at 0320 GMT, compared with US$1,625.50 yesteeday.
In other markets, Jakarta was closed for a public holiday.