Asian stocks slipped across the board on Wednesday as various factors, including weaker metals prices and monetary policy concerns in China, soured investor risk sentiment.

Spreadbetters saw bearish equity sentiment extending into Europe, predicting Britain's FTSE would open 0.5 per cent lower, seeing Germany's DAX start down 0.6 per cent and France's CAC opening 0.5 per cent lower.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped to a two-month low and was last down 1.5 per cent.

The index took early cues from overnight losses on Wall Street, where the stuttering technology sector had taken a further toll.

Shanghai stocks hit 3-month low

The fall in the index deepened as Asia's equity markets suffered losses, with Shanghai stocks falling to three-month lows and Hong Kong's Hang Seng dropping to a one-month trough amid fears over central banks tightening liquidity.

Japan's Nikkei was last down 2 per cent with non-ferrous metals producers suffering large losses after copper's slide overnight to a two-month low.

Perceived geopolitical risks also dented confidence with US President Donald Trump due to recognise Jerusalem as the capital of Israel later on Wednesday.

US Treasury yields

In the debt markets, the two-year Treasury yield hovered near a nine-year high, elevated by the Fed's tighter policy path and on expectations the US Congress will pass tax reform legislation that gives the economy a fiscal boost.

But the 10-year Treasury yield declined, flattening the yield curve further. The curve has flattened as investors see limited room for long-term US inflation.

The dollar fell, weighed by lower long-term US yields as broader investor risk appetite recedes. The dollar index against six major currencies slipped 0.2 per cent to 93.213.

The greenback lost 0.4 per cent to 112.110 yen and the euro rose 0.15 per cent to $1.1842 after shedding 0.35 per cent the previous day.

The pound stood at $1.3426 for a loss of 0.1 per cent, having taken a small knock after Sky News reported of a foiled plot to assassinate British Prime Minister Theresa May.

Sterling had fallen to as low as $1.3370 on Tuesday on disappointment after May failed to clinch a deal to open talks on post-Brexit free trade with the European Union.

Bitcoin climbs to $12,205.46

Bitcoin continued its relentless advance, climbing to a fresh record high of $12,205.46 on the BitStamp exchange. Its latest rise took bitcoin's gains so far in 2017 above 1,100 per cent.

“It took a long time to establish the methodology and the way bitcoin was traded. The original appeal came from the fact they were unregulated. However it's clearly moved out of those shadows and into centre stage,” said Mick McCarthy, CMC Markets' chief market strategist in Sydney.

“We are in the throes of a bubble market, and one of the characteristics of a bubble market is that there is no way to know when the bubble will burst.”

Crude oil futures

In commodities, US crude oil futures were down 0.4 per cent at $57.38 per barrel after American Petroleum Institute data showed that US gasoline stocks and distillate inventories rose more than expected last week.

Brent crude lost 0.4 per cent to $62.62 per barrel, though it is up by over 40 per cent since June, supported by a supply cut led by OPEC and Russia which is expected to last throughout 2018.

Copper on the London Metal Exchange crawled up 0.35 per cent to $6,565.50 per tonne after sliding to a two-month low of $6,507.50 overnight.

Base metals were hit by a combination of the dollar's rise earlier in the week on US tax reform hopes, jitters over demand in major consumer China and a technical sell-off stemming from a rise in inventories.

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