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Singapore - Stocks edged lower throughout Asia on Tuesday following the lead of US markets while the dollar found support on suggestions Japan's central bank might act to ease monetary policy and push down the yen.
Currency markets also remained anxious about the prospects for new Japanese intervention and gold held near record highs.
US and European stock markets dipped as investors grew nervous after four weeks of gains and increasingly wary of European debt challenges, particularly those facing Ireland and Portugal.
The Wall Street Journal reported that Federal Reserve officials were considering a more open-ended smaller-scale bond buying programme than was the case in 2009. Traders said that prompted a dip in US treasuries and could offer the dollar some support.
Japan's Nikkei average fell 0.6%, dropping as the deadline passed for investors to receive dividends on Tokyo stocks for the financial half year.
The yen hovered for a time near its highest level since Tokyo's heavy intervention two weeks ago to sell the currency and depress it.
But sources said the Bank of Japan was considering whether to ease monetary policy further though it could delay action pending a consensus on how to keep economic recovery on track.
Talk of easing was having an effect as was the constant possibility of intervention.
"The market consensus is now that there won't be endless yen strengthening, that if the dollar falls below ¥84 authorities are likely to intervene," said Kenichi Hirano, operating officer at Tachibana Securities.
Korean stocks dipped 0.31%, while Australian stocks were virtually unchanged.
Despite this month's gains, Tokyo stocks rose only some 1.6% this quarter, lagging other major stock markets. The S&P 500 has gained more than 10% this quarter, while South Korean shares have risen some 9.3%.
