An index of Asian shares erased its early gains on Tuesday after a measure of Chinese factory activity unexpectedly skidded to an 11-month low.
The flash HSBC/Markit Purchasing Managers' Index (PMI) dipped to 49.2 in March, below the 50-point level. Economists had forecast a reading of 50.6, slightly weaker than February's final PMI of 50.7.
MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.1 percent, signaling persistent weakness in the world's second-largest economy that is likely to add to calls for more policy easing from Beijing.
"A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers," Annabel Fiddes, an economist at Markit said.
The Shanghai Composite Index which has recently pushed to seven-year highs, sagged 0.3 percent in early trading. Japan's Nikkei stock average slipped about 0.5 percent, pulling away from the previous session's 15-year highs.
The U.S. Dollar
The U.S. dollar edged slightly higher on the day, but still remained well off its recent highs as investors bet that the U.S. Federal Reserve will hold back from hiking interest rates in the months ahead.
Underscoring that the long-term view remains intact but the near-term is unclear, Fed Vice Chair Stanley Fischer, the central bank's second-in-command, said on Monday that the Federal Reserve is "widely expected" to begin raising interest rates this year though the policy path remains uncertain.
Fischer said the stronger dollar and weaker oil prices figure in U.S. policymaking, but said the central bank is "trying to look through those phenomena."