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 The Nikkei <.N225> fell 1.2 percent to threaten major chart support
around 14,203, a break of which could trigger a retreat to 14,000.
The sales tax rises to 8 percent from 5 percent on April 1, which is
also the start of the new financial year in Japan.
Following its usual inverse relationship with stocks, the yen
briefly pushed to the highest in a week against the U.S. dollar at
101.71.
Talk of possible stimulus in China had been supporting Asian stocks
in recent sessions, but the effect was starting to fade given the
lack of any concrete steps.
The Australian market shed 0.9 percent <.AXJO> while MSCI's broadest
index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> eased 0.2
percent. Stocks in South Korea, Taiwan and Singapore all managed
minor gains.
Some blamed Wall Street's slip on news the United States and the
European Union had agreed to work together to prepare possible
tougher economic sanctions in response to Russia's behavior in
Ukraine.
The Dow <.DJI> ended down 0.60 percent, while the S&P 500 <.SPX>
fell 0.70 percent. The technology-heavy Nasdaq Composite Index <.IXIC>
lost 1.43 percent to a low not seen in six weeks.
The U.S. losses were led by technology stocks, with Facebook <FB.O>
off almost 7 percent a day after announcing a $2 billion takeover of
Oculus VR Inc, a maker of virtual-reality glasses for gaming.
Shares in Citigroup Inc <C.N> fell after hours when the Federal
Reserve rejected its plans to buy back $6.4 billion of stock and
boost its dividends, citing deficiencies in the bank's ability to
plan for stressful situations.
Others blocked by the Fed in their plans for higher dividends or
share buy backs included the U.S. units of HSBC <HSBA.L>, RBS <RBS.L>
and Santander <SAN.MC>.
DIVERGING YIELDS
In debt markets, the talk was all about Wednesday's auction of new
U.S. five-year notes that drew such stellar demand from investors
that it left dealers with the lowest share of an offer on record.
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That drove five-year yields down a sharp 7 basis points to 1.74
percent, unwinding some of the rise seen since Federal Reserve Chair
Janet Yellen last week spooked markets with talk of rate hikes next
year.
Yields in Europe have been falling even more as policymakers there
hint at radical stimulus measures. Some of the European Central
Bank's most conservative policymakers have said the bank could adopt
more unconventional measures to tackle a surging euro and ward off
deflation.
As a result the premium that U.S. two-year notes offer over German
debt hit a 15-month high on Wednesday, making the euro relatively
less attractive against the dollar.
That saw the single currency ease to $1.3783, well off the week's
peak of $1.3875. The biggest loss came against the Australian dollar
where the euro sank 0.9 percent to a four-month trough at A$1.4910.
The U.S. dollar was a touch softer against a basket of major
currencies at 79.999 <.DXY>.
In precious metals trading, spot gold was subdued at $1,304.96 an
ounce after plumbing a 5-week low of $1,298.29 on Wednesday.
U.S. crude oil was holding at $100.18 a barrel having gained a
dollar on Wednesday as inventories at the future's delivery point
dropped for the eighth straight week.
Brent for May delivery was off 19 cents at $106.84 a barrel.
(Editing by Shri Navaratnam)
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