Fresh labor unrest could hold back investors in South Korea.
SINGAPORE (Reuters) -- Asian shares sagged on Tuesday, with the Tokyo market the biggest loser as investors took profits from the latest rally.
The dollar edged higher against the yen but was steady against the euro as the market awaited a decision by the U.S. Federal Reserve on Wednesday over cutting interest rates.
An expectation that the cut might be a hefty half percentage point, rather than the assumed quarter point, helped to drive Tokyo and other share markets higher last week.
A fall of 1.4 percent in blue chip stocks on Wall Street on Monday helped to give direction to Asian investors.
"With the Nikkei having been a bit overbought, New York having fallen, and foreign buying coming down a notch, it's rather natural to see a correction today," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Japan.
Tokyo's Nikkei 225 index dropped 2.38 percent to 8,919.26, breaking a five-day run of rises. Japan's megabanks fell heavily, UFJ Holdings slumping 4.3 percent and Mizuho Financial Group 3.9 percent.
Telco China Unicom Ltd was among the bigger losers in Hong Kong, where the leading index had dropped 1.4 percent by 0630 GMT. The phone company was down 4.7 percent.
The Australian market, as usual, moved less aggressively than others.
Falls in heavyweights such as News Corp Ltd, Rio Tinto Ltd/Plc and BHP Billiton Ltd/Plc helped to pull that market 0.75 percent lower.
The Seoul market had its own reasons for selling: evidence of rising labour-union power.
"Labour unrest is the biggest domestic concern holding back investors," said Jeon Sang-pil, an analyst at Samsung Securities.
Unions have lately forced a delay in the integration of two banks and are planning big strikes in several other industries.
Seoul shares finished 1.6 percent lower.
Shares also fell in other Asian markets, including Taiwan, Singapore and New Zealand.
While the euro was holding its ground against the dollar, dealers said the European currency's downward momentum could pick up should it break below $1.15.
At 0630 GMT the euro was worth $1.1550, little changed from its late Monday levels in New York.
Against the yen, the dollar was a little firmer, at 117.85 yen.
Spreads on Asian dollar bonds widened as a recent flood of new issues and uncertainty about the Fed's intentions triggered a mild sell-off.
The spread on South Korean sovereign bonds due in 2013 widened by as much as eight to 10 basis points.
Japanese government bonds staged a mild recovery from recent losses. The key 20-year bond was half a basis point stronger at 1.02 percent. Gold was trading at $353.80 an ounce, up from $352.80 at the U.S. close.
Oil traded narrowly as the market awaited weekly U.S. inventory data. U.S. futures stood at $29.16 a barrel, down one cent.
SINGAPORE (Reuters) -- Asian shares sagged on Tuesday, with the Tokyo market the biggest loser as investors took profits from the latest rally.
The dollar edged higher against the yen but was steady against the euro as the market awaited a decision by the U.S. Federal Reserve on Wednesday over cutting interest rates.
An expectation that the cut might be a hefty half percentage point, rather than the assumed quarter point, helped to drive Tokyo and other share markets higher last week.
A fall of 1.4 percent in blue chip stocks on Wall Street on Monday helped to give direction to Asian investors.
"With the Nikkei having been a bit overbought, New York having fallen, and foreign buying coming down a notch, it's rather natural to see a correction today," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Japan.
Tokyo's Nikkei 225 index dropped 2.38 percent to 8,919.26, breaking a five-day run of rises. Japan's megabanks fell heavily, UFJ Holdings slumping 4.3 percent and Mizuho Financial Group 3.9 percent.
Telco China Unicom Ltd was among the bigger losers in Hong Kong, where the leading index had dropped 1.4 percent by 0630 GMT. The phone company was down 4.7 percent.
The Australian market, as usual, moved less aggressively than others.
Falls in heavyweights such as News Corp Ltd, Rio Tinto Ltd/Plc and BHP Billiton Ltd/Plc helped to pull that market 0.75 percent lower.
The Seoul market had its own reasons for selling: evidence of rising labour-union power.
"Labour unrest is the biggest domestic concern holding back investors," said Jeon Sang-pil, an analyst at Samsung Securities.
Unions have lately forced a delay in the integration of two banks and are planning big strikes in several other industries.
Seoul shares finished 1.6 percent lower.
Shares also fell in other Asian markets, including Taiwan, Singapore and New Zealand.
While the euro was holding its ground against the dollar, dealers said the European currency's downward momentum could pick up should it break below $1.15.
At 0630 GMT the euro was worth $1.1550, little changed from its late Monday levels in New York.
Against the yen, the dollar was a little firmer, at 117.85 yen.
Spreads on Asian dollar bonds widened as a recent flood of new issues and uncertainty about the Fed's intentions triggered a mild sell-off.
The spread on South Korean sovereign bonds due in 2013 widened by as much as eight to 10 basis points.
Japanese government bonds staged a mild recovery from recent losses. The key 20-year bond was half a basis point stronger at 1.02 percent. Gold was trading at $353.80 an ounce, up from $352.80 at the U.S. close.
Oil traded narrowly as the market awaited weekly U.S. inventory data. U.S. futures stood at $29.16 a barrel, down one cent.
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