Asian stock markets struggled to gain ground on Wednesday as economic data showed the process of turnaround to recovery was likely to be a slow grind, and the dollar capitalized on that more cautious sentiment.

Oil held above $70 a barrel after industry inventory data showed a bigger-than-expected fall in crude stocks, which helped pare some of the previous day's losses after data unsettled investors about a potential U.S. economic rebound.

In Japan, business confidence pulled back from a record low hit three months ago, but the improvement was smaller than market players had expected and still a negative reading.

That followed an unexpectedly steep slide in U.S. consumer confidence in June, which dented optimism on Wall Street about prospects for recovery and weighed on shares in Asia.

Australia's benchmark index <.AXJO> got the new quarter off to a weak start, falling 2 percent as growth-sensitive stocks such as shopping mall owner Westfield Group lost ground.

The broader MSCI index of Asia-Pacific shares excluding Japan <.MIAPJ0000PUS> eased 0.4 percent, holding below June's 2009 peak, while Tokyo's Nikkei share average <.N225> was flat, with Orix Corp <8591.T> and All Nippon Airways <9202.T> sliding on news of possible public share offerings. <.T>

Japanese construction machinery makers such as Komatsu <6301.T> edged higher on news that China's official purchasing manager index (PMI) gained.

But analysts noted big Japanese firms in the Bank of Japan's tankan survey planned to cut capital spending, a key driver of the economy, by 9.4 percent in the year to next March, more than the market expected.

Basically, the tankan showed that things aren't all that good in the near term but seemed encouraging for the longer term, making its overall impact neutral, said Kenichi Hirano, operating officer at Tachibana Securities.

I'd have liked to see slightly better capital spending, but given the current situation it's only natural that it should fall -- after all, with production down, the last thing manufacturers can do right now is spend.

In Seoul, shares <.KS11> rose 0.8 percent helped by a slower than expected fall in South Korean exports, while component-maker LG Innotek <011070.KS> rallied on the first day of trading after it completed a merger with LG Micron Ltd.

The U.S. Conference Board's index of consumer attitudes fell in June to 49.3 from a downwardly revised 54.8 in May, deflating stocks on the last day of the quarter.

The Dow Jones industrial average <.DJI> slipped 0.97 percent, the Standard & Poor's 500 Index <.SPX> dropped 0.85 percent and the Nasdaq <.IXIC> eased 0.49 percent.

Nevertheless, Wall Street still closed out its best quarter in a decade, with the S&P 500 jumping 15.2 percent in the three months to end-June, the blue-chip Dow advancing 11 percent and the Nasdaq climbing by more than a fifth. <.N>

JOBS DATA IN FOCUS

Markets are likely to be subdued as they await key U.S. jobs data on Thursday which help put another piece in the puzzle about how fast the world's largest economy is mending.

The dollar index <.DXY> gained 0.2 percent as the greenback took back lost ground from sterling and the yen.

The yen fell broadly as Japanese pension and mutual funds picked up overseas assets at the start of the new quarter, traders said, showing that investors are, however, still keen to put their money back to work.

The dollar climbed 0.4 percent to 96.77 yen, touching its highest in nearly two weeks, while the euro was steady at $1.4020 and sterling fell 0.2 percent to $1.6432 after surging to an 8-month high above $1.67 on Tuesday.

Gold edged higher to $929.60 an ounce, taking a breather after falling more than 1 percent the previous day when a stronger dollar prompted broad-based selling across the commodities sector.

U.S. crude futures stood at $70.59 a barrel, helped by news from the American Petroleum Institute that domestic crude stocks fell 6.8 million barrels to 349.7 million barrels last week, against analysts' forecasts of a 2 million barrel fall.