Asian stocks closed mostly lower on Friday, with investors opting to take some profits ahead of key US employment data for last month rather than push stocks further after recent sustained gains, dealers said.
They said that at current levels, such profit-taking was only to be expected as the markets enter the mid-summer doldrums. The series of strong US economic data over the past few weeks has boosted confidence greatly, pointing to further gains next month when business picks up again.
While oil prices continued to test record highs, there is no sign of this feeding through into radically higher inflation while the prospect of more US interest rate increases holds no fears, since most just see them as returning to a neutral setting of around 4 percent over the balance of the year.
On the day, losses were broad-based, with the exception of the Chinese markets, which continued to get a boost from last month's yuan revaluation.
Seoul, down 1.98 percent, was the worst performer as investors decided to take some money off the table after the market had advanced to near 11-year highs.
Tokyo lost 0.98 percent, with sentiment hit by concerns that Japanese Prime Minister Junichiro Koizumi will call snap elections if his signature reform of the post office is voted down by the upper house of parliament.
Sydney was flat, just off record levels as investors marked time ahead of the US jobs data and next week's US Federal Reserve meeting on interest rates.
Mumbai, which has defied gravity and the weather to post an eight-day record-breaking run, finally succumbed to profit-taking, falling 0.55 percent.
Markets in Taipei were closed due to Typhoon Matsa.
Japanese share prices fell for a second straight day, losing 0.98 percent on concern that the country could be headed for early elections if parliament votes down a proposal to break up the post office, dealers said.
The Tokyo Stock Exchange's benchmark NIKKEI-225 index dropped 116.83 points at 11,766.48. The broader TOPIX index of all first section shares shed 14.98 points or 1.24 percent to 1,189.19.
Declines led gainers by a margin of nearly nine to one on volume of 1.66 billion shares.
"Amid growing political uncertainty and renewed concerns over near-term prospects for the US stock market, no one dares to re-test the psychologically important 12,000-point level on the NIKKEI-225 index," World Nichiei Frontier Securities market analyst Hideyuki Suzuki said.
South Korean share prices closed sharply lower, falling nearly 2 percent in a broad-based correction to recent sharp gains following Wall Street's overnight downturn, dealers said.
They said foreign and retail investors sold off IT and other blue chips, with sentiment hit by rising oil prices and caution ahead of interest rate decisions by the Bank of Korea and the US Federal Reserve in the coming week.
At the same time, an upturn in the won sparked fresh concerns over the outlook for exports, the economy's main driver, although a correction was to have been expected given the market's recent advance to near 11-year highs.
"The market was suddenly in an uproar, with many investors perplexed by the won's rise, the oil price rise and foreign investor selling," CJ Investment Securities analyst Kim Seung-Han said.
The KOSPI index closed down 22.03 points or 1.98 percent at 1,089.36, off a high of 1,101.15 and a low of 1,084.23.
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