Japanese shares fell 1 percent on Thursday and other Asian markets were on the defensive as investors viewed rare gains this week as overdone in light of a shaky global economy and financial system.
The yen rose against the U.S. dollar after revised figures in Japan showed the economy had contracted slightly less in the fourth quarter than previously reported, while the New Zealand dollar found some support on a central bank rate cut that was smaller than some had expected.
Oil prices bounced from two days of sharp losses though the focus remains on a meeting of OPEC this week and uncertainty about whether the oil producers will cut production or not.
Thursday's stock trading reflected a trend this year of steep declines followed by bursts of small gains that quickly fizzle as investors focus on the bleak global economy and uncertainty about how to cleanse the banking system of toxic debt.
"Market falls were in store for us as it's hard to expect gains two days in a row, considering current market conditions," said Fumiyuki Nakanishi, manager at SMBC Friend Securities in Japan.
Japan's Nikkei average .N225 fell 1.1 percent after surging nearly 5 percent on Wednesday.
The MSCI index of shares elsewhere in Asia-Pacific .MIAPJ0000PUS dropped 0.2 percent, cutting into 5 percent of gains over the previous two sessions.
UBS (UBSN.VX) (UBS.N) helped douse the rally sparked by news from Citigroup (C.N) that it had been profitable in the first two months. The Swiss bank said on Wednesday that earnings would remain at risk due to volatile markets.
Group of 20 finance ministers meet this weekend amid investor skepticism about whether policy makers can offer credible solutions to the global woes.
Investors are particularly eager for more details about how the United States will cleanse its banking system of toxic debt at the heart of the global credit crisis.
The United States and Britain on Wednesday called on leading economies to ramp up spending to break the global recession and to complement efforts to revamp regulations to prevent future financial crises.
The call for more economic stimulus has already been met coolly by many European nations, raising doubts about whether the G20 finance gathering in England will make much headway in battling the deepening downturn.
DILEMMA
Major Asian stocks indexes fell. Seoul dropped 0.5 percent and both Singapore .FTSTI and Shanghai .SSEC slipped more than 1 percent.
Australian shares .AXJO were steady, while Hong Kong .HSI and Taiwan posted modest gains.
