Stocks slid and the yen rose on Wednesday after news Bank of America needs $34 billion in fresh capital, sending shivers through investors ahead of official results of stress tests on U.S. banks due for release on Thursday.

U.S. S&P 500 futures were down 1 percent, indicating a lower market open later in the day on Wall Street, after a source familiar with the government test results on 19 banks told Reuters that Bank of America has been deemed to have additional capital needs worth nearly half its current market cap of $69.4 billion.

The yen strengthened across the board as dealers scrambled to relative safety, knocking the Australian dollar down 1.7 percent despite much stronger-than-expected Australian retail sales numbers.

This could put a dent in the rally we've seen, said Jan Lambregts, head of Asia research at Rabobank in Hong Kong. Definitely we'll have a breather until we get these (stress test) results. Perhaps there are a few surprises in there, Lambregts said.

The MSCI index of Asia Pacific stocks outside Japan fell 1.2 percent, after hitting a seven-month high on Tuesday. Cyclical sectors like energy and materials in addition to financials led the index lower.

Japan's markets were closed for a holiday.

Hong Kong's Hang Seng index was down 0.8 percent, weighed by 2.7 percent drop in shares of China Construction Bank after the Financial Times said Bank of America was considering the sale of an $8 billion stake in the firm.

Investor willingness to take risks has been steadily increasing over the last new months and has been strengthened by signs around the world that the global economic downturn is easing.

That has prompted a rally in equities, commodities, emerging market debt and high-yielding currencies, which may only slacken momentarily because of uncertainty over the stress tests.

In the short term, fundamentally, a correction is overdue and U.S. bank stress test results could well become a trigger as they will reveal capital needs without any real immediate remedy, said Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong.

However, market positioning is likely to trump fundamentals, and it seems real money is coming out of the trenches and shooting with not just sniper fire but machine guns, he said in a note.

The U.S. dollar was down about 0.7 percent against the yen to 98.22 yen.

High-grade credit spreads in Asia widened slightly on the Bank of America news, though they remained near the tightest levels since October, the Asia iTraxx investment-grade index showed.

U.S. crude for June delivery was nearly unchanged on the day at $53.80 a barrel after rising to a high for the year overnight of $54.83.