Il Nuovo Postiglione - Asia markets mostly down ahead of key US data

Tokyo closed down by nearly two percent, though Hong Kong was up more than one percent by the afternoon.

Shanghai also posted gains, while Seoul, Taipei, Sydney and Jakarta were all in the red.

This followed a weak Monday performance from Wall Street and Europe, with sentiment souring on flat UK economic growth and expectations for another strong US inflation report, which will likely bring aggressive interest rate hikes from the Federal Reserve.

The government is set to release the US consumer price index (CPI) for March on Tuesday, after inflation rose 7.9 percent over the 12 months to February, the biggest increase in 40 years.

Calling it the "Putin price hike" in reference to the economic ramifications of Russia's invasion of Ukraine, White House Press Secretary Jen Psaki told reporters: "We expect March headline inflation to be extraordinarily elevated."

Economists are expecting annual US inflation to spike to nearly 8.5 percent, which would be the highest since late 1981.

"It's not really about the level of inflation anymore, as it has been well broadcast that CPI is hotter than hot," said Matt Simpson, senior market analyst at City Index. "The big question is how long it takes to come back down and whether the Fed will tip the US into a recession in doing so."

"What we're faced with this year is stagflation," Kathryn Rooney Vera, head of global macro research at Bulltick LLC, told Bloomberg Television.

"It's a very complicated environment that the Fed has found itself in", and the market is pricing in potentially 50 basis points of hikes at each of the next two policy meetings, she added.

US Treasuries declined, taking the 10-year yield past 2.80 percent.

All those concerns were weighing on the Tokyo market, Okasan Online Securities said in a note.

"Investors will then likely refrain from making major moves ahead of the release of the March US consumer prices data later in the day. The market will likely lose a sense of clear direction" until the data's release, the brokerage said.

"The Chinese government gave out its first online game approvals in months," noted Jeffrey Halley, senior markets analyst at OANDA, in relation to the gains in Hong Kong and Shanghai.

The approvals were for the first batch of new video game licences since July, a step that could ease some of the worst concerns about Beijing's gaming-sector curbs.

But "sentiment hasn't been helped by the latest Covid extended lockdown measures being initiated by Chinese authorities in Shanghai in what is likely to be a fruitless attempt to stem the spread of the more contagious Omicron variant", said Michael Hewson, chief market analyst at CMC Markets UK.

Oil steadied, with Brent crude back just over $100 a barrel, after a tumble that erased most of the commodity's gains sparked by Russia's war in Ukraine.

- Key figures around 0710 GMT -

Tokyo - Nikkei 225: DOWN 1.81 percent at 26,334.98 (close)

Hong Kong - Hang Seng Index: UP 1.09 percent at 21,440.35

Shanghai - Composite: UP 1.46 percent at 3,213.33

Brent North Sea crude: UP 3.15 percent at $101.58 per barrel

West Texas Intermediate: UP 3.21 percent at $97.32 per barrel

Euro/dollar: DOWN at $1.0857 from $1.0871

Pound/dollar: DOWN at $1.3005 from $1.3021

Euro/pound: FLAT at 83.49 pence

Dollar/yen: UP at 125.68 yen from 125.40

New York - Dow: DOWN 1.19 percent at 34,308.08 (close)

London - FTSE 100: DOWN 0.67 percent at 7,618.31 (close)

-- Bloomberg News contributed to this report --

F.S.Ferrari--INP