Asian stocks and commodities fell on Monday as fraud charges against Goldman Sachs, disappointing company earnings and a surprise drop in U.S. consumer sentiment gave investors an excuse to take profits from a recent rally to multi-month highs.
Some analysts say a sell-off in riskier assets was due anyway given their recent strong run-up, and that growing evidence the world economy was healing well should limit losses.
Charges against Goldman weighed on regional bank stocks even though most Asian banks were not as active as their U.S. peers in the subprime mortgage market.
Airlines and tourism stocks also fell as flights to Europe remained grounded due to a volcanic ash cloud from Iceland.
Weak Asian equities boosted safe-haven demand, pushing government bond yields lower while lifting the yen and U.S. dollar.
What we are seeing is a reaction to the Goldman Sachs news, but I think this will be very short-lived with investors focus likely to return to economic data in the next few days, said Joseph Capurso, currency strategist at Commonwealth Bank.
The yen rose as far as a one-month high of 91.85, up 0.3 percent from late trade in New York on Friday. The U.S. dollar also got a boost as investors retreated into the safety of its liquidity.
The euro was down against the dollar at $1.3485 having fallen to as low as $1.3469, its lowest since April 9.
For the first time in weeks, Greece's debt woes were not the focal talking point in the market. With a trip to Greece by European and IMF officials delayed by the volcanic ash cloud, no major updates expected before Wednesday.
Oil lost more than a dollar to retreat further from 18-month highs. Shanghai copper dropped over 2 percent, tracking losses in the London three-month benchmark contract which had hit 20-month highs last week.
MSCI index of Asian stocks outside Japan lost 1.6 percent, further retreating from a 22-month high hit on Thursday.
Japan's Nikkei was down 1.8 percent after breaching its closely-watched 25-day moving average.
Top bank Mitsubishi UFJ Financial Group fell 2.7 percent, Mizuho Financial Group lost 2.1 percent, and Sumitomo Mitsui Financial Group, Japan's No. 3 bank, fell 3.5 percent.
Among travel-related stocks Singapore Airlines, the world's second-largest carrier by market value, shed 2.7 percent. Korean Airline, South Korea's top air carrier, lost 1.48 percent.
Hana Tour, one of South Korea's leading tour agencies, dropped 2.73 percent.
U.S. Treasuries were firm in early Asian trade, while five-year Japanese government bond yields fell below 0.5 percent to a one-month low.
U.S. consumer sentiment took a surprise negative turn in early April due to a persistently grim outlook on income and jobs, a private survey released on Friday showed. Consumer sentiment is seen as a proxy for consumer spending, which fuels about 70 percent of the U.S. economy.
After a six-week rally, U.S. stock indexes fell by as much as 1.6 percent on Friday, with Goldman plunging 13 percent. Markets were also pressured by results from Google Inc,, Bank of America and General Electric which fell short of expectations.
(Additional reporting by Anirban Nag in Sydney)
(Reporting by Koh Gui Qing; Editing by Kim Coghill)