Asian markets mostly fell on Friday as traders fret over the outlook for Donald Trump's much-vaunted tax-cut plans while profit-takers cashed in after the latest rally.
However, Hong Kong and Shanghai bounced from early losses to sit in positive territory as investors welcomed news that China would further open its financial sector to foreign firms.
The losses followed a broad retreat on Thursday, which started when Tokyo's Nikkei saw a two percent gain in the morning reverse to a 1.7 percent loss at one point.
While investors will be keeping an eye on a meeting of Asia-Pacific leaders, including Donald Trump and Xi Jinping, in Vietnam this weekend their main focus is on Washington, where Republican lawmakers are struggling to agree on a fiscal reform bill.
Global markets were sent surging last month when Trump's administration unveiled a plan to slash taxes across the board in a bid to fire up the US economy.
But in recent days it has emerged Republicans have differing ideas about how to push them through, with senators calling for a one-year delay to corporate tax cuts, among other things.
"The delayed phase-in of the corporate tax cut, an increase in the repatriation tax, as well as other walk-backs... have knocked stocks in the US and across the globe lower," said Greg McKenna, chief market strategist at AxiTrader.
House Speaker Paul Ryan insisted the details will be "ironed out" between the two competing plans but analysts said there are worries the overhaul could succumb to party infighting in the same way Trump's healthcare reforms were killed.
"Given the apparent differences between the two bills, the implementation of tax reform before the end of the year looks pretty challenging and achieving it before Thanksgiving (November 23rd) seems close to impossible," said Rodrigo Catril, FX Strategist at National Australia Bank, in a commentary.
- Eyes on Middle East -
The uncertainty has dug into the dollar, sending it down against its major peers, particularly the yen, which has hurt Japanese exporters. By lunch in Tokyo the Nikkei was down 1.4 percent, having chalked up a 26-year high earlier in the week.
Other markets were also in the red, with Sydney and Seoul each shedding 0.3 percent and Singapore 0.1 percent. Wellington, Taipei, Bangkok, Jakarta and Manila also suffered.
However, Shanghai performed a U-turn to end up 0.1 percent, while Hong Kong was up a similar amount in the afternoon after the financial markets announcement.
China's vice finance minister Zhu Guangyao said foreign firms will be allowed to own as much as 51 percent of shares of tie-ups in securities, funds and futures industries, instead of the current 49 percent limit, according to the official Xinhua news agency. The limits will be phased out in three years.
The news comes after years of complaints by companies particularly from the United States and Europe that they were being shut out of sectors.
It will also be seen as a victory for Trump, who finished a state visit to China on Friday during which he railed against "very one-sided and unfair" Sino (Dusseldorf: 1205802.DU - news) -US trade relations.
Oil prices eased slightly but analysts say they could press higher on growing tensions in the crude-rich Middle East after Saudi Arabia accused Iran of "direct military aggression" over a missile attack near Riyadh by Tehran-backed Yemeni rebels.
"Sanctions against (major producer) Iran will take a significant amount of supply offline," said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.
- Key figures around 0720 GMT -
Tokyo - Nikkei 225: DOWN 0.8 percent at 22,681.42 (close)
Hong Kong - Hang Seng: UP 0.1 percent at 29.164.66
Shanghai - Composite: UP 0.1 percent at 3,432.67 (close)
Euro/dollar: UP at $1.1650 from $1.1642 at 2200 GMT
Pound/dollar: DOWN at $1.3140 from $1.3145
Dollar/yen: DOWN at 113.41 yen from 113.42 yen
Oil - West Texas Intermediate: DOWN 10 cents at $57.07 per barrel
Oil - Brent North Sea: DOWN 14 cents at $63.79
New York - DOW: DOWN 0.4 percent at 23,461.94 (close)
London - FTSE 100: DOWN 0.6 percent at 7,484.10 (close)