Asian stock markets dipped on Wednesday after Pyongyang abruptly called off talks with Seoul, throwing a US-North Korean summit into doubt, while surging bond yields revived worries about faster US interest rate hikes that could curb global demand.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent as Pyongyang's move appeared to mark a break in months of warming ties between North and South Korea and with Washington.

Tensions on Korean peninsula

A cancellation of the June 12 summit in Singapore could see tensions on the Korean peninsula flare again even as investors worry about China-US trade tensions and the sustainability of global economic growth.

“This will weigh on the Korean reconstruction beneficiaries that have had a strong run on peace and even reunification hopes recently,” JPMorgan analysts wrote in a note.

“The broader risk for the region if talks do break down is that Trump no longer feels the need to keep China on side and could escalate trade tensions again.”

US retail sales, factory data

Strong US retail sales and factory data on Tuesday pushed the US 10-year yield through a key level to hit 3.095 per cent, its highest since July 2011, raising worries about higher borrowing costs for companies worldwide.

The 10-year yield was last at 3.063 per cent. The rise in yields hurt US share markets on concerns it would undercut stock valuations.

The Dow Jones Industrial Average fell 193.00 points, or 0.78 per cent, to 24,706.41, the S&P 500 lost 18.68 points, or 0.68 percent, to 2,711.45 and the Nasdaq Composite dropped 59.69 points, or 0.81 percent, to 7,351.63.

Elsewhere in Asia, Japan's Nikkei slid 0.4 percent, while South Korea's KOSPI struggled for traction.

Stocks in China dipped as traders awaited news from a second round of Sino-US trade talks in Washington this week, with both sides believed to be still far apart. But Australian stocks bucked the trend and advanced 0.4 per cent.

Currency market

The strong US data underpinned the dollar in currency markets.  The US dollar index, which tracks the greenback against a basket of six major rivals, hits a 2018 high of 93.46 on Tuesday and last stood at 93.31.

The euro fell to as low as $1.18155, its lowest level in about five months. The dollar held firm at 110.27 yen after having hit a near four-month high of 110.45 yen on Tuesday.

The yen largely shrugged off data that showed Japan's economy shrank by 0.6 per cent on an annualised basis in the January-March quarter, a sharper contraction than the median estimate of 0.2 per cent and marking the end to eight straight quarters of expansion.

“US retail data assured that the world is still in a synchronised global growth. If US retail had been a disappointment, the market would have taken Japan's GDP more negatively,” said Tohru Yamamoto, chief fixed income strategist at Daiwa Securities.

High-yielding Asian currencies were particularly vulnerable to higher US yields, which could prompt investors to shift funds out of emerging markets.

The Indonesian rupiah hit a 2-1/2-year lows while the Malaysian ringgit hit a four-month low. The South Korean won was steadier but the country's bond yields rose to the highest level since late 2014.

In commodities markets, gold slightly rebounded after hitting a 4 1/2-month low the previous day on a strong dollar. It stood at $1,294 per ounce, off Tuesday's low of $1,289.30.

Crude oil

Crude oil prices remained near recent highs amid concerns US sanctions on Iran may restrict crude exports from a major producer.

US light crude was 0.4 per cent lower at $71.06 after reaching $71.92 on Tuesday, its highest level since November 2014. Brent crude oil traded at $78.21 a barrel, down 0.3 per cent. On Tuesday, it reached an intraday peak of $79.47 a barrel, its highest since November 2014.