HONG KONG (MarketWatch) -- Asian markets were mostly lower Tuesday after a retreat on Wall Street and ahead of a decision on interest rates by the U.S. Federal Reserve, with Japanese stocks dragged down by steelmakers on a report Toyota Motor Corp. plans to ask its suppliers to cut prices sharply.
Australian stocks also declined, with Telstra Corp. sliding on a broker downgrade of its target price after the government excluded the telecommunications major from the national broadband network tender process. Hong Kong stocks wavered in a range around break-even.
"A lot of market activity is fading away as we get closer to Christmas and the New Year," said Jamie Spiteri, head of trading at Shaw Stockbroking in Sydney.
Spiteri said a steep interest-rate cut by the Federal Open Markets Committee may result in an immediate positive reaction in equity markets, "but we are expecting lower rates as a common landscape across most markets to continue."
The Nikkei 225 Average dropped 0.8% to 8,595.70 in the afternoon, after climbing 5.2% in the previous session. The broader Topix index gave up 1.7% to 832.75.
Australia's S&P/ASX 200 index slid 0.9% to 3,558, South Korea's Kospi lost 1% to 1,146.98 and New Zealand's NZX 50 rose 0.7% to 2,695.08.
Hong Kong's Hang Seng Index ended the morning trading session up 0.2% at 15,082.04, after moving on either direction of break-even during the session. China's Shanghai Composite lost 1.8% to 1,929.36.
Taiwan's Taiex lost 1.2% to 4,558.57 and Singapore's Straits Times Index fell 0.9% to 1,758.61. India's Sensex was also unsettled and recently slipped 0.3% to 9,799.79, after advancing in early minutes.
Regional detail
Steelmakers dropped in Tokyo, with Nippon Steel Corp. giving up 3.7% and JFE Holdings Inc. sliding 5.1%.
The decline came after the Nikkei business daily reported that the auto giant plans to ask steelmakers to cut prices of sheet steel by about 30% during the next financial year because of weakening demand for automobiles and expectations that raw-material prices will drop further. Automakers and steel producers negotiate prices once a year, with the prices agreed upon by Toyota and Nippon Steel serving as an industry benchmark, it added.
Shares of Toyota ) dipped 0.4%.
Among other exporters, Sony Corp. dropped 5.4% and Honda Motor Co. skidded 5.6% on concerns about the impact of a strong yen on their earnings.
In Asian currency trading, the U.S. dollar bought 90.52 yen, compared with 90.54 yen Monday. A year ago, the dollar was buying more than 110 yen, but has steadily lost ground against the Japanese currency in the wake of the global financial crisis.
Shares of Toshiba Corp. slipped 0.3% on a Nikkei report the company plans large-scale production cuts at its semiconductor plants. Toshiba plans to halt production at its Kitakyushu plant for a month, in addition to a three-week suspension at another site in Kyushu and suspension of some production lines at its Yokkaichi plant in Mie prefecture.
In Sydney, shares of Telstra Corp. slid 3.6% after Citigroup cut the company's target price to A$3.40 ($2.28) from A$3.65.
The downgrade came a day after Telstra announced it was excluded by the government in the tendering process for the broadband network because it hadn't included a plan for involving small and medium enterprises in building the network when it submitted a proposal last month.
Shaw Stockbroking's Spiteri said the news "had an effect on Telstra's share price and subsequently on some market confidence because there was a significant amount of capital which had been directed toward Telstra as a defensive play during these uncertain times."
In Hong Kong, shares of China Cosco Holdings Co. slipped 0.4% in volatile trading after the shipping company it had incurred a loss of 3.95 billion ($577 million) on forward freight agreements because of a sharp decline in marine freight rates.
January crude-oil futures slipped as much as five cents to $44.46 a barrel in electronic trading, after dropping $1.77 to $44.51 a barrel Monday on the New York Mercantile Exchange.
On Wall Street, the Dow Jones Industrial Average dropped 0.8% to 8,564.53, the S&P 500 index declined 1.3% to 868.57 and the Nasdaq Composite gave up 2.1% to 1,508.34.
