Most stocks in Asia edged lower on Wednesday, weighed down by resource-related shares and doubts about a global economic recovery, while oil slipped below $70 a barrel ahead of U.S. inventory data that could reflect slowing energy demand.

U.S. Treasuries eased on profit taking after a surge overnight, but may not stay down for long, especially after the Federal Reserve bought $6.45 billion in Treasury debt on Tuesday and a report showed industrial capacity use at a record low.

Several U.S. economic indicators this week have come in below expectations, raising fears that investors may have pushed up equity and commodity prices too far, too quickly.

The market does need to come off because lot of cyclicals have become very expensive very quickly, said Damien Boey, equity strategist at Credit Suisse in Australia.

There is still economic recovery in the wings and we are still yet to see it in the data and the financials have not actually gone up in full measure.

The MSCI index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> fell 1 percent and looked set for its fourth consecutive day of losses. The index has now fallen 5.6 percent from an eight-month high reached two weeks ago.

The materials sector had continued to climb after the broad market began to drift lower after June 3, but along with the energy sector this week has been leading the region lower.

Japan's Nikkei share average <.N225> eked out small gains, rising 0.4 percent in listless trade. Defensive sectors, such as pharmaceutical and food-related stocks, were among the main supports to the index.

U.S. markets fell more than 1 percent overnight as mixed economic data and disappointing sales by top U.S. consumer electronic retailer Best Buy spurred worries about an anemic recovery. <.N>

The U.S. dollar was largely unchanged on the day against the euro and yen, after Brazil, Russia, India and China after a first summit together issued a joint statement that did not mention any doubts about the dollar's role as the primary reserve currency.

The dollar had been under some pressure heading into the summit on fears that Russia, which has publicly made clear it wants to have new world reserve currencies, would coax China into bashing the dollar together.

The euro was at $1.3825, down 5 cents since hitting a 2009 high around $1.4337 on June 3.

The dollar was trading at 96.41 yen after earlier taking a brief dive below 96.00 yen to a two-week low.

Besides headlines about the U.S. dollar's global reserve role, perceptions on risk expressed through equity markets have also been a driver. Fears that price increases have run ahead of fundamentals, particularly with earnings estimates for 2010 in the double digits, have weighed on global stocks.

That is a similar picture of markets around the globe and quite appropriately so, given we are in the midst of a reassessment of expectations for the global economy - about which there is little more agreement than that challenges lie ahead, said Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong in a note.

Commodity markets have been very sensitive to this notion.

U.S. crude oil futures fell a fourth day, with the July contract down 0.3 percent to $70.25 a barrel after touching a session low of $69.91 earlier.

The American Petroleum Institute data showed late on Tuesday that U.S. crude stocks fell by a smaller-than-expected 1.3 million barrels last week. The U.S. Energy Information Administration will release its inventory data later in the day.

The Reuters-Jefferies CRB index <.CRB>, a basket of 19 commodity futures, has slipped about 4 percent from a seven-month high reached last Thursday. It was still up 15 percent since the end of April.

The benchmark 10-year U.S. Treasury yield ticked up to 3.68 percent after tumbling to 3.66 percent late on Tuesday in New York. After climbing to an eight-month high of 4 percent on Thursday, the 10-year yield has come off sharply as investors bought back bonds with a higher coupon as doubts about the recovery pile up.

(Additional reporting by Denny Thomas in SYDNEY)

(Editing by Kim Coghill)

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