UPDATE:Asian Shares Mostly Dn On US Cue But China Higher

SINGAPORE -- Asian stock markets traded mostly lower Wednesday after a weak session on Wall Street. China shares ignored the rest of the region and rose, led by oil refiners after a fuel price hike.

"Everyone has been calling for a pullback," said Patersons private client adviser Chris Blair. "Economic data are still okay and the longer-term view is bullish, but in the short term I think there has to be some profit-taking."

Japan's Nikkei 225 was down 2.8%, with South Korea's Kospi Composite down 0.7%, Australia's S&P/ASX 200 off 2.0% and New Zealand's NZX-50 down 0.6%. Singapore's Straits Times Index shed 1.3%, while Hong Kong's Hang Seng Index lost 1.8%. China's Shanghai Composite index advanced 0.5%

The Dow Jones Industrial Average lost 2.0% Tuesday, even though the Institute for Supply Management's monthly manufacturing index marked its highest reading since June 2007.

"Tellingly, on a day when a green shoot seemed to blossom, an old worry rose to the fore - concerns about the health of banks, though one might struggle to pinpoint a definitive trigger for the day's move, apart from the calendar," said David Watt, Senior Currency Strategist at RBC Capital Markets.

"There has been intense focus over the past few weeks on the historical fact that September can be painful to equities. Not usually so early though," he added. DJIA futures traded one point lower in screen trade.

Regional investors mostly shrugged off a rebound in China shares, which was led by oil refiners after Beijing raised gasoline and diesel prices, effective Wednesday.

Zhou Lin at Huatai Securities said the market was still rebounding from Monday's 6.7% drop but it was uncertain if the gains could be maintained. "We need to watch whether there will be more tightening from the central bank as liquidity is the key thing that has been pressuring the market recently."

Sinopec's mainland shares added 0.4%, while PetroChina gained 1.8%, but both traded off highs.

Most financial stocks were weaker across the region, tracking losses for their U.S. peers. In Japan, Mizuho Financial was down 1.8% while Daiwa Securities lost 2.3% and Nomura fell 1.7%. In Australia, Macquarie was down 3.4%, NAB down 2.9% and ANZ down 2.9%. In Hong Kong, HSBC traded down 2.8%, while Bank of China shed 1.6%.

Bucking the trend, most Korean bank shares turned positive after Fitch revised its outlook on the country's sovereign A+ rating to Stable from Negative, saying the banks' foreign-currency funding distress seen during the global credit crisis has eased significantly since the second quarter of this year.

Woori Finance added 2.8% and Shinhan Financial advanced 2.1%. KB Financial was down 0.4% after earlier trading down as much as 3.6%.

Among other markets, Malaysia's KLCI index shed 0.2%, Indonesian shares fell 2.2%, while Taiwan's Taiex added 0.1% on continued buying in tech shares. Thailand's headline index was down 0.9%.

Australian cyclical stocks were weak, with BHP Billiton down 2.2% and Rio Tinto down 2.5%.

Japanese exporter stocks were hit also by a stronger yen, with Sony down 3.2% and Canon down 3.8%.

In Korea, Samsung Electronics was down 1.3%, though Hyundai Motor gained 1.8% and Kia Motors rose 2.0%, outperforming the broader market after posting solid U.S. sales for August.

In Japan, Elpida Memory dropped 16.6% on concerns about dilution of its share value after the company announced a new share issuance plan.

In currency markets, increased risk aversion was the main theme, with the euro weakening to its lowest levels against the yen since July 15, touching Y131.47. It last traded at Y131.83, from Y132.12 in New York.

The single currency was also weaker against the U.S. dollar, at $1.4206 from $1.4217, while the dollar was at Y92.75, from Y92.83.

The Australian dollar retraced some earlier losses against the U.S. dollar after news that the economy in the second quarter had grown 0.6% from the quarter before, beating expectations for a 0.2% expansion. The Aussie was trading at US$0.8291, off a low of US$0.8238, but still down compared with US$0.8419 in Sydney on Tuesday.

The New Zealand dollar traded at US$0.6740, from US$0.6866.

Khoon Goh, Senior Markets Economist at ANZ Bank, said US$0.6650 for the New Zealand dollar was "not out of the question."

Japanese government bond futures hit a five-month high at 139.60 on the Nikkei's fall. The lead September contract was last up 0.21 at 139.44 points. The five-year JGB yield was down 1 basis point at 0.59%, its first time been below 0.6% since September 2005.

But RBS Securities Strategist RuiXue Xu said JGB gains may be tempered by next week's shift of the lead contract from September to December, prompting market players to close out open interest in the September contract.

Base metals trade was quiet after Tuesday's big falls, with LME three-month copper at $6,136 per ton, down $59 from London kerb. Spot gold was down $3.30 from New York at $953.90 per troy ounce.

The October Nymex crude oil futures contract was 51 cents higher at $68.56 per barrel on Globex, after falling 2.7% in New York.