Asian markets turned choppy, swaying in and out of positive territory Wednesday as concerns about U.S. debt ceiling and lingering worries about the Fed's monetary stance undermined investor confidence.
Investors were worried U.S. lawmakers would fail to strike a budgetary deal to ward off a potential federal government shutdown next week.
On Tuesday, Moody's Investor Service warned failure to raise the country's debt limit would result in "more negative outcome for financial markets and the economy than a government shutdown".
Meanwhile, Fed taper talks also continued to play at the back of investors' minds.
Tokyo's Nikkei slipped 0.3% amid a stronger yen, as investors preferred the relative safety of the Japanese currency in times of such uncertainty.
Sydney's S&P/ASX All Ordinaries, meanwhile, was making steady progress unlike others in the region, on account of gains in the resources and banking sectors.
Stocks on the Move
Exporters in Tokyo extended their losses with Sharp Corp down over 2% while Komatsu Ltd. erased 2.1%.
Mitsubishi Electric Corp. slipped 0.9% despite declaring higher interim dividend.
Among the rare gainers, Tokyo Electron Ltd. soared 13.4% amid news Applied Materials Inc. is set to buy the company in an all-stock deal valued at more than $7billion.
Tokyo Electric Power soared 5.8% amid reports Russian state-owned company might assist the power utility to resolve problems being faced at the defunct Fukushima nuclear power plant.
In Hong Kong, some airline stocks and property developers were in the green but losses in others mostly offset these gains.
Air China and China Eastern Airlines gained 0.4% and 0.8% respectively, while Poly Property Group added 0.4%. Sino Land Company was up 1.1%.
On the other side, however, Cathay Pacific Airways slipped 0.8% and China Resources Land Ltd. dropped 2%.
Resources and financials were trading mixed.
It was a mixed bag for equities on Mumbai's benchmark Sensex index too. On the upside, Tata Motors, BHEL, Hero MotoCorp and Tata Power added in the range of 1.5% to 2.5%.
But offsetting these gains, HDFC Bank, Mahindra & Mahindra, Reliance Industries and ITC lost around 1% to 1.5% each.
As against its regional counterparts, Sydney's benchmark index outperformed, logging modest gains in a steady session.
Top gainers included miners -- Fortescue Metals Group bounced 3.8% while BHP Billiton and Rio Tinto gained around 0.6% each.
Major banks NAB and ANZ climbed over 1.5% each while Westpac tacked on a percent.
Adding to the gains, oil firms Santos and Woodside Petroleum improved 1.8% and 1% respectively. Linc Energy jumped 10.6%.