Asian shares held near three-month lows on Wednesday as a rally in Chinese stock markets faltered, while the US dollar stayed static as investors waited for clues from a Federal Reserve meeting on when US interest rates are likely to rise.
Endless wrangling over the Greek debt crisis also kept broader sentiment leaning towards safe haven assets. Both Japan's Nikkei and Korea's KOSPI flipped into negative territory, Reuters reported.
MSCI's index of Asia-Pacific shares outside Japan edged up 0.4 percent from a three-month low on Tuesday.
Shares in Shanghai lost another 1.26%, bringing the decline to nearly 5% since Tuesday, ahead of a torrent of IPOs that temporarily could tie up an astonishing 6 trillion yuan ($966.7 billion) of capital. Hong Kong's stock market was wallowing at two-month lows.
"The China and Hong Kong stock markets appear to be ripe for some correction thanks to their expensive valuations unless we see some big stimulus measures from authorities and that will keep risk appetite on the backburner," said Grace Tam, a markets strategist at JP Morgan Asset Management in Hong Kong.
The Shanghai market had gained 50% since the start of the year, making Chinese stocks the world's best performers in US dollar terms.
The frothiness was evident from Thomson Reuters data that showed some stock markets, such as the Shenzhen stock exchange , trading far above their 10-year median average, while the price-to-earnings valuations on the MSCI Asia-ex Japan index is only slightly above its ten-year average.
On Wall Street, the Dow ended Tuesday up 0.64%, while the S&P 500 added 0.57% and the Nasdaq 0.51%.
The euro was hovering around $1.1252, well within the $1.1150/1.1384 range of the past week or so.
