Asian shares slipped on Wednesday, but held near 3 1/2 month highs hit earlier this week as investors took comfort from a brightening global economic picture, as they absorbed the shock of the suspected Islamic State suicide bomb attacks in Brussels.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.3 percent, while Japan's Nikkei .N225 inched up 0.2 percent.
Chinese shares inched down, with both the Shanghai Composite .SSEC and the CSI 300 .CSI300 down 0.1 percent. Hong Kong's Hang Seng retreated 0.3 percent.
Wall Street shares were mixed on Tuesday. The S&P 500 .SPX lost 0.09 percent while the Nasdaq Composite .IXIC added 0.27 percent.
But emerging markets fared better, with MSCI's emerging market index .MSCIEF rising 0.2 percent to four-month high, having gained more than 20 percent from its seven-year trough in January. They eased back 0.2 percent on Wednesday.
Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank in Tokyo, said the recent Group of 20 meeting and annual gathering of China's parliament had restored some faith in the outlook for the global economy, as investors were reaassured that policymakers would take appropriate monetary and fiscal policy measures to bolster their economies.
"That is reassuring markets and investors' funds that had fled to the U.S. markets are returning to high-yielding currencies and emerging markets," he said.
Financial markets took in their stride news of the suicide bomb attacks that killed at least 30 people in Brussels. Risk appetite quickly returned and gains in safe-haven assets evaporated within hours.
"The unfortunate reality is that terrorism has become more ‘commonplace’ in the minds of regular folk after 9/11," Bernard Aw, market strategist at online brokerage IG in Singapore, wrote in a note. "Asia may be more resilient today, where cautious trading should prevail."
The FTSEuroFirst 300 index .FTEU3 of leading shares in Europe closed down 0.1 percent, rebounding from a 1.6 percent drop earlier.
In the currency market, the euro EUR= last stood at $1.1211, having slipped to $1.11885 on Tuesday.
Sterling held at $1.4204 GBP= on Wednesday after falling more than 1 percent to one-week lows against the dollar following news of the attack on Brussels, on fears it could persuade more people to vote in favor of Britain leaving the European Union in a June referendum.
The Chinese yuan firmed against the dollar, with the spot market CNY=CFXS opening at 6.4847 per dollar compared with the midpoint rate CNY=SAEC of 6.4936 set by the People's Bank of China prior to market open.
It eased to 6.4885, but remained stronger than the previous close of 6.4880.
The safe haven yen quickly gave up its gains and last stood at 112.25 to the dollar JPY=, down 0.6 percent so far this week.
The dollar, which edged down in early trade as Asian investors reacted to news of the Brussels attacks, was helped by a rise in U.S. bond yields after Chicago’s Federal Reserve president, seen as a policy dove, struck a bullish tone on the U.S. economy.
Chicago Fed President Charles Evans said he expects two more rate increases this year, based on the current economic outlook.
The dollar index .DXY, which tracks the U.S. currency against six major rivals, was little changed at 95.684.
The 10-year U.S. Treasuries yield rose to 1.954 percent US10YT=RR, its highest in a week, compared to 1.871 percent at the end of last week, and edging near last week's seven-week high of 2.002 percent. It was last at 1.9421 percent.
U.S. interest rate futures are also fully pricing in a chance of more than one rate hike by the end of year.
Oil prices slipped from their highs after U.S. industry data showing bigger than expected builds in domestic inventory, but prices maintained a firm tone, supported by general recovery in risk appetite.
Brent futures LCOc1 slid 1 percent to $41.36 per barrel, but remained near the three-month high of $42.54 set on Friday.
U.S. crude CLc1 also declined 1 percent to $41.02.
The American Petroleum Institute (API), an industry group, said after futures market settlement on Tuesday that U.S. crude stockpiles rose almost 9 million barrels last week to reach a record high of nearly 532 million.