(Reuters) -- Asian shares retreated from four-month highs Tuesday as markets paused from last week's rallies, calculating the impact on growth from the Federal Reserve's aggressive stimulus and eyeing whether Spain will request a bailout to ease its fiscal strains.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> eased 0.1 percent after touching its highest point since May 3 on Monday. European shares slipped from 14-month highs on Monday as traders booked profits while U.S. stocks gave back some of last week's big gains when they surged to nearly five-year highs.
Japan's Nikkei stock average <.N225> opened nearly flat, caught between China-related companies weighed by mounting tension between Beijing and Tokyo over a territorial dispute and a weaker yen, which benefits exporters. Japanese financial markets were closed on Monday for a holiday. .T
The yen traded at 78.66 to the dollar, after touching a one-week low of 78.93 on Monday. The yen scaled a seven-month high of 77.13 on Thursday after the Fed announced the launch of a third round of bond buying known as quantitative easing (QE).
"A pause in post-QE3 euphoria saw major asset classes pare recent advances. Lingering concern at Spain's brave fiscal face, geopolitical tension in the Middle East and in China/Japan, and a disappointing NY regional manufacturing report all weighed on sentiment," said Sean Callow, senior currency strategist at Westpac in Sydney, in a research note.
Data on Monday showed factory activity in New York state contracted for a second month in a row in September, with the Empire State "business conditions" index falling to its lowest level in nearly 3-1/2 years.
"The market's focus is expected to shift gradually to economic fundamentals" with key central bank events out of the way, Barclays Capital analysts said in a note.
"The U.S., which has been growing relatively well compared to other advanced economies, is not immune to the softness in the general trade environment," and the Empire State index suggested the U.S. manufacturing sector will remain sluggish, they said.
With investors turning to economic fundamentals, the minutes of the Reserve Bank of Australia's September meeting due later in the session will be closely watched for signs of how concerned the RBA is about weakness in China and commodity prices, as well as the strength of the Australian dollar.
Australia said on Tuesday it expects minerals and energy export revenues to total A$190 billion ($200 billion) in the year to June 30, 2013, down 9 percent from a June forecast of A$209 billion, reflecting how the country's resources sector is losing steam as slackening demand from top customer China drove down commodity prices.
The dollar index <.DXY> measured against a basket of key currencies stayed near Friday's 6-1/2 month low of 78.601.
The euro traded at $1.3109, below a 4-1/2 month high of $1.31729 hit on Monday.
Gold fell on Monday while a sudden slide in oil triggered selling across commodities, although the cause of the drop was unclear. The U.S. Commodity Futures Trading Commission looking into the case said it is unclear if high-frequency trading played a role.
Spot gold traded at $1,759.89 an ounce, below a 6-1/2-month high of $1,777.51 hit on Friday.
U.S. crude oil futures were up 0.3 percent at $96.90 a barrel while Brent futures inched up 0.1 percent to $113.88.
Asian credit markets were steady, with the spread on the iTraxx Asia ex-Japan investment-grade index kept at its tightest level since July 2011.
U.S. Treasuries prices rebounded on Monday on bargain hunting after a sharp sell-off last week when optimism about the European debt crisis eroded safe-haven demand while the Fed's bold monetary easing stoked inflation fears.
Yields on 10-year Spanish bonds rose back above 6 percent on Monday amid uncertainty over if and when Madrid will formally seek financial aid needed to trigger European Central Bank bond buying.
The ECB could cut its main interest rate, put its deposit rate into negative territory and offer banks a new round of ultra-cheap funding, policymaker Luc Coene said on Monday, adding Spain's borrowing costs would soar again without support.