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Asian stocks opened lower on Tuesday under a cloud of uncertainty about when the US Federal Reserve will start to reduce its stimulus, which pushed up yields on US Treasuries to two-year highs.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5%, while Japan's benchmark Nikkei stock average shed 0.8% in early trade.
Minutes from the US central bank's last policy meeting will be released on Wednesday and could provide investors with fresh clues on when the Fed plans to taper its monthly $85 billion in asset purchases, which many believe could begin next month.
A key risk in the minutes is whether the Fed has begun discussing a possible change in its threshold rate for unemployment from the current 6.5% level as a means of providing additional accommodation, strategists at Barclays Research said in a note to clients on Tuesday.
"Any discussion in this regard is likely to be viewed as a dovish surprise by the market," they said, adding that the dollar's failure to rally broadly despite the sharp plunges in high-yielding currencies suggests that the market may already be positioning for such an announcement.
Against a basket of major currencies, the dollar was slightly higher, as the appeal of higher yields on US debt offset fears of the impact of Fed stimulus reduction.
The yield on benchmark 10-year Treasury notes rose as high as 2.90% on Monday. That was its highest since July 2011, and up sharply from 1.60% in early May, before the Fed started signalling its intentions to pare back its quantitative easing if the economy continued to strengthen.
Emerging markets that have benefited from the Fed's easy policy are already feeling the pinch. The Indian rupee cratered to a record low of 63.30 per dollar on Monday, and Indonesia's rupiah and Brazil's real both skidded to four-year lows.
On Monday, the Dow Jones industrial average , the Standard & Poor's 500 Index and the Nasdaq Composite Index began the week with losses, all ending lower for the fourth straight session amid the continuing uncertainty about the US economic policy outlook.
On the commodities front, copper prices added 0.2% to $7,321.75, while gold fell to $1,366.81 per ounce, after snapping a three-day winning streak on Monday and moving away from a two-month high hit that session.
Brent crude prices fell 0.1% to $109.80 a barrel, pressured by Fed fears but supported by the loss of Libya's oil exports as well as concerns that continuing unrest in Egypt could spread and interfere with supply.
