Asian shares fell on Wednesday as a rally fueled by speculation that the Federal Reserve may signal further moves to support the struggling U.S. economy swiftly petered out, while gold rebounded from its sharpest one-day slide in 18 months.

Tokyo markets showed a muted reaction to a downgrade of Japanese government debt by ratings agency Moody's, with the yen a touch softer and Japanese government bond futures dipping briefly.

It's been a while since Japan lost its triple-A status, so it is unlikely that Japan's interest rates will rise sharply, said Fumiyuki Takahashi, managing director at Barclays Capital.

Gold climbed more than 1 percent, after tumbling from a record high on Tuesday as investors switched money back into shares, propelling U.S. stocks up around 3 percent.

The rally, perversely, was driven by more dismal U.S. economic data, which raised expectations that Federal Reserve Chairman Ben Bernanke will use his speech on Friday at a central bankers' conference in Jackson Hole, Wyoming, to signal a fresh monetary offensive to fend off a renewed recession.

Last year, Bernanke used the occasion to prepare the ground for the Fed's second round of quantitative easing, a $600 billion bond-buying program designed to pump cash and confidence into financial markets that became known as QE2.

The market is becoming more pessimistic about the economic outlook and is responding by pricing in a greater chance of QE3, said Bricklin Dwyer, economist at BNP Paribas, in a client note.

The reality is that we are getting more data confirming a slowdown in manufacturing activity and a dead cat bounce in the (U.S.) housing sector.

Asian shares opened higher but swiftly retreated into negative territory, with Japan's Nikkei share average down 0.2 percent, while MSCI's broadest index of Asia Pacific shares outside Japan lost 0.5 percent.

World stocks have tumbled this month on fears the United States is slipping back into recession and as Europe's sovereign debt crisis worsens.

The MSCI index remains down nearly 14 percent for the month so far, and about 18 percent below is April high.

Moody's announced shortly before Asian markets opened that it was cutting Japan's credit rating by one notch to Aa3, mirroring an earlier downgrade by rival S&P, blaming large budget deficits and a buildup of debt since the global recession of 2009.

The yen came under mild pressure, with the dollar trading up a little around 76.80.

Japanese government bond September 10-year futures fell initially, but reversed course as equities slipped to trade up 0.08 point at 142.63, and the benchmark 10-year yield was steady at 1.010 percent.

Japanese government bonds are insulated by the fact that the vast majority of Tokyo's debt pile is domestically held.

JGBs have tended not to show any lasting reaction to ratings downgrades in the past -- probably because in Japan the problem if anything is one of over-saving, which banks recycle into JGBs, which remain 'risk free assets', said Naomi Fink, head of Japan strategy at Jeffries Japan.

Gold was up about 1.2 percent around $1,853 an ounce, after sliding from a record above $1,910 on Tuesday. Gold's safe-haven appeal has driven it to a series of records in recent months.

U.S. crude oil, which has tended to follow equities in recent months, rose 0.2 percent to $85.58 a barrel.

(Additional reporting by Ian Chua in Sydney; Editing by Richard Borsuk)