Tokyo - Asian shares fell on Tuesday as investors took a break from the new year's rallies, with caution setting in ahead of corporate earnings season for the last quarter of 2012 and the European Central Bank's policy meeting later in the week.
The euro remained firm against the dollar on speculation the ECB might refrain from signalling more interest rate cuts when it meets on Thursday.
The dollar paused from its rapid and sharp rally against the yen after rising more than 10% in less than two months on speculation the new Japanese government will push for aggressive monetary easing to beat deflation.
US stock prices retreated from five-year highs on Monday, spurring selling of oil, gold and other risky investments and reviving some safety bids for US and German government debt.
US earnings season unofficially kicks off when aluminium maker Alcoa reports its results after Tuesday's market close.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3%, after drifting lower the previous session when investors took profits from the new year rally, which lifted the index more than 2% in the first week of 2013.
South Korean shares were among the underperformers with a 0.4% drop, despite Samsung Electronics , the world's top maker of memory chips and handsets, estimating its October-December operating profit at a record 8.8 trillion won ($8.27bn).
Samsung's guidance, coming ahead of full quarterly results by January 25, was in line with forecasts. A technical glitch and a worrying outlook for corporate results cooled investment appetite.
"Overall, fourth-quarter earnings are likely to be bad, except for some tech firms. However, the economy is turning around, so this is likely to be the worst of it," Kim Young-joon, an analyst at SK Securities, said of Seoul shares.
The dollar was down 0.2% to 87.60, trimming earlier losses.
Japan's benchmark Nikkei stock average fell 0.5%, after snapping a five-session winning streak on Monday when a pause in the yen's weakness triggered profit-taking on exporters.
The euro inched up 0.1% to $1.3129.
"Trading for the new year kicked off in full force yesterday and it is natural for investors to start cautiously with profit taking from the new year's rally," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
"I expect position adjustments to continue ahead of key events such as the ECB meeting and earnings reports starting with Alcoa," Saito said.
He said the euro could still push higher to around $1.3150 ahead of the ECB meeting.
Saito said the dollar may face selling pressure against the yen, having scaled its highest since July 2010 at ¥88.48 on Friday, up about 7% over the past month. But he said support was seen firm at ¥86.50.
Australia's trade deficit in November widened to its largest since early 2008 as imports again outpaced exports, though a recent meteoric rise in the price of iron ore suggests the worst of the trade pain is over for the resource-rich nation.
China's annual economic growth may have quickened to 7.8% in the fourth quarter, a Reuters poll showed, snapping seven straight quarters of weaker expansion, but the recovery is likely to be tepid and the economy may need continued policy support. The data is due out on January 18.
Before the growth data, China will release its trade data on Thursday, which includes initial estimates for metals imports and exports.
A firmer euro and hopes for the Chinese data underpinned London copper prices, which rose 0.3% to $8 096 a tonne, as China is the world's biggest copper consumer accounting for 40% of refined demand.
"It may be there is a sense that they (metals) have been oversold in the short term," said metals analyst Ivan Szpakowski at Credit Suisse in Singapore, adding that the euro's gains have also provided added support.
US crude inched up 0.1% to $93.30 a barrel and Brent futures inched up 0.1% to $111.50.