Asian shares turned lower on Tuesday and the dollar was trapped in a tight range as investors waited for Federal Reserve Chairman Ben Bernanke to shed light on how soon key interest rates may start to rise.
After the surprise increase last week in the rate the Fed charges banks for emergency loans, the market focus is now on how Bernanke explains the move in testimony in the House and the Senate on Wednesday and Thursday.
After a soft performance on Wall Street, the MSCI index of Asian shares excluding Japan <.MIAPJ0000PUS> fell 0.5 percent, faltering just below the 399 level that has blocked it in the past week, while Japan led the losses with a drop of 1 percent.
Investors probably want to hear that the U.S. discount rate hike was not intended as tightening, and that the Fed plans to maintain its current monetary policy stance for some time, said Kim Se-jung, a market analyst at Shinyoung Securities in Seoul.
* Japan's benchmark Nikkei <.N225> fell 1.2 percent to 10,280 after climbing 2.7 percent the previous day to its highest finish in three weeks and making the first break in a month above its 25-day moving average at 10,300. <.T>
* Toyota Motor Corp <7203.T> shares slipped after news it faces a criminal investigation into its handling of safety problems. Investors are also keen to see how President Akio Toyoda's testimony to Congress pans out.
* Shares in Hong Kong <.HSI> fell 1 percent, after a jump the previous day, and Shanghai <.SSEC> slid 2 percent. Ping An Insurance <2318.HK> <601318.SS>, China's second-largest insurer, fell after it said three of its mainland shareholders would sell shares over the next five years.
* Seoul shares retreated, with the Korea Composite Stock Price Index <.KS11> down 0.6 percent. Shares in LG Display <034220.KS>, the world's No.2 flat panel maker, retreated 4 percent on concerns second-quarter demand could slow after robust growth in the first quarter.
* On Monday, the Dow Jones industrial average <.DJI> fell 0.2 percent, the Standard & Poor's 500 Index <.SPX> fell 0.1 percent and the Nasdaq Composite Index <.IXIC> eased 0.1 percent.
* San Francisco Federal Reserve Bank President Janet Yellen, who is not a voting member of the Fed's monetary policy-setting committee this year, said the U.S. economy still needed extraordinarily low interest rates, as inflation was undesirably low and growth was likely to be sluggish for several years.
* The tension kept the dollar in tight ranges. The dollar index <.DXY> was flat at 80.500, well below an eight-month high of 81.342 last week.
* The euro was steady at $1.3600, up from a nine-month low at $1.3443 set last Friday. It was flat against the yen, after losing ground on Monday when a spokesman for Germany's Finance Ministry said it had made no decisions on a lifeline for heavily indebted Greece.
(Additional reporting by Sui-Lee Wee in Hong Kong, Aiko Hayashi in Tokyo and Jungyoun Park in Seoul; Editing by Kazunori Takada)