TOKYO Asian shares could come under pressure on Wednesday after the world's share markets were rattled by fears of an impending reduction in the U.S. Federal Reserve's stimulus following positive U.S. data.
European shares suffered their biggest falls since August while Wall Street retreated for a third straight day on Tuesday, dropping from record levels as investors took profits.
In Asia, Japanese shares are likely to open lower, with the Nikkei futures falling more than one percent from Tuesday close.
On Wall Street, the Dow Jones industrial average .DJI fell 0.6 percent while the Standard & Poor's 500 Index .SPX declined 0.32 percent, with consumer discretionary shares .SPLRCD leading the losses amid signs of weak holiday shopping.
Revived talk of tapering in the Fed's bond buying could hurt emerging market shares and currencies in particular.
"Ample liquidity from the Fed had flown to emerging markets, in a way hiding all the problems each market has. But after the Fed signaled tapering in May, investors are focusing on them," said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.
In Asia, investors' concerns include persistent current account deficits in India and Indonesia, as well as the latest political instability in Thailand.
The Indonesian rupiah was buried near five-year lows hit last week while the Thai baht flirted with a three-month low.
Expectations that the Fed will go ahead with paring its $85 billion-a-month bond-buying program look set to intensify if upcoming U.S. economic data shows encouraging growth.
While Friday's U.S. jobs report for November is seen as by far the most important, traders will be looking to the ADP employment report, new home sales figures, services activity readings from the Institute for Supply Management, all of which are scheduled for Wednesday.
Solid U.S. manufacturing data released on Monday boosted optimism that the U.S. economy was barely damaged by a government shutdown in October.
Talk of tapering also disrupted the yen's decline, which has been propelled by speculation of more carry-trades on the back of improving risk sentiment.
The dollar fell about one percent to 102.40 yen from Tuesday's six-month high of 103.38 yen.
The euro was steadier at $1.3595, not far from one-month high of $1.3622 hit last week.
Gold and silver, which like stocks have benefited from the U.S. stimulus because of inflation fears, traded near 5-month lows.
Gold last stood at $1,222.74 per ounce near Tuesday's five-month low of $1,215.60 while silver traded at $19.10, having slipped to $18.94 on Tuesday.
(Editing by Eric Meijer)