Asian stock markets moved cautiously Monday as investors sat tight for fresh news about a possible US rate rise and after G7 finance ministers pressed Japan not to weaken its currency.
Global stocks had rallied in the previous session despite talk that the US Federal Reserve could raise interest rates in June, but analysts expect some market volatility ahead of further indicators.
A stronger yen weighed on Tokyo exporters after G7 finance ministers clashed over the weekend on whether Japan should intervene to stem the rise of its currency.
Oil prices were lower after Iran said it had no plans to join any output freeze by other major crude producers and as Canadian officials lifted the evacuation order for oil production sites north of Fort McMurray, which has been threatened by wildfires.
"Expect short-term share market volatility to remain high," Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd., told Bloomberg News.
"Fed worries are coming back into focus and this could mean more uncertainty around the US dollar, the yuan and commodity prices. However, beyond near-term volatility, we still see shares trending higher."
Dealers will now be eyeing a speech by Federal Reserve chair Janet Yellen at Harvard University on Friday.
Sydney shed 0.6 percent and Hong Kong was down 0.3 percent in the afternoon. But Shanghai ended 0.6 percent higher and Seoul ticked up 0.4 percent.
US benchmark West Texas Intermediate was down 0.85 percent at $47.75 and Brent crude was trading 0.9 percent lower at $48.28.
Energy firms were among those hit, with Sydney-listed WorleyParsons sliding 3.7 percent and Japanese explorer Inpex slumping 2.2 percent.
But Taipei-listed Apple suppliers got a boost Monday after a report the smartphone maker told them to kickstart production for its iPhone 7 series, due to be released in September.
Pegatron surged 9.9 percent and Catcher Technology jumped 9.7 percent, while top chipmaker Taiwan Semiconductor Manufacturing (TSMC) and components manufacturer Hon Hai Precision Industry also rose.
- Tokyo rebuffed -
Tokyo stocks closed down 0.5 percent after the dollar fell against the yen and after Japan published fresh data showing exports faltered in April.
A stronger yen hurts Japanese exporters, a key driver of the world's third largest economy, by making their products relatively more expensive overseas.
The greenback retreated against the safe-haven currency after Tokyo's threat to intervene to tame a resurgent yen faced criticism at the G7 ministers' meeting.
Japan last intervened in currency markets around November 2011, when it tried to stem the yen's rise against the dollar to keep an economic recovery on track after the quake-tsunami disaster earlier that year.
It had hoped its G7 counterparts -- the US, Britain, Germany, Italy, France and Canada -- would give it some wiggle room to tame the unit as it threatens Japan Inc's profits.
But the G7 agreed on the "importance of all countries refraining from competitive devaluation", while US Treasury Secretary Jacob Lew pressed Tokyo to uphold its earlier commitment not to interfere with exchange rates.
The meeting comes ahead of a G7 summit in Japan later this week to be attended by US President Barack Obama and other leaders.
In early European trade, London slipped 0.2 percent, Frankfurt dropped 0.3 percent and Paris gave up 0.2 percent.
- Key figures around 0800 GMT -
Tokyo: Nikkei 225: DOWN 0.5 percent at 16,654.60 (close)
Shanghai - Composite: UP 0.6 percent at 2,843.65 (close)
Hong Kong - Hang Seng: DOWN 0.3 percent at 19,797.57
London - FTSE 100: DOWN 0.2 percent at 6,144.46
Euro/dollar: DOWN at $1.1215 from $1.1220 on Friday
Dollar/yen: DOWN at 109.50 yen from 110.15 yen
New York - Dow: UP 0.4 percent at 17,500.94 (close)