After enjoying a relatively purple patch over the past week, investors were put back on the back foot by solid retail sales data that pointed to a surge in inflation that could push the Federal Reserve to hike borrowing costs three more times this year.
The news boosted expectations for the world's number one economy and sent benchmark 10-year Treasury yields to a seven-year high.
But the prospect of debt costing more to service hit equities, sending all three main indexes on Wall Street lower.
The losses spread to Asia with Hong Kong falling 0.2 percent and Shanghai 0.7 percent off.
Tokyo ended 0.4 percent lower after data showed Japan's economy contracted in January-March for the first time in two years.
Singapore shed 0.3 percent and Wellington sank more than one percent, while Manila, Bangkok and Jakarta were also well down. However, Sydney rose 0.2 percent, Seoul edged up 0.1 percent and Taipei put on 0.2 percent.
In early European trade London was flat and Paris fell 0.1 percent but Frankfurt rose 0.2 percent.
The dollar, which benefits from higher US rates, was holding above the 110 yen mark and around its highest mark since early February.
The euro is around its weakest level this year, with a series of soft economic data out of the eurozone denting the prospects of an end to the European Central Bank's crisis-era stimulus. The pound continues to be dampened by Brexit uncertainty.
- 'Eye on North Korea' -
The greenback also surged against high-yielding currencies, with the South Korean won 0.5 percent off and Australia's dollar 0.7 percent lower.
North Korea moved back into the spotlight as it threatened to cancel next month's historic summit between Kim Jong Un and Donald Trump if Washington seeks to push Pyongyang into unilaterally giving up its nuclear arsenal.
"If the US is trying to drive us into a corner to force our unilateral nuclear abandonment, we will no longer be interested in such dialogue," first vice foreign minister Kim Kye Gwan said in a statement carried by KCNA state media.
The announcement came as a shock after months of rapid diplomatic rapprochement that has fuelled hopes for peace on the peninsula.
Earlier Wednesday it cancelled a meeting with South Korea at the last minute, blaming joint US-South Korean military exercises, which it called a "rude and wicked provocation".
"Keep an eye on North Korea," said Greg McKenna, chief market strategist at AxiTrader. "While the South and the US are used to playing these international games the (North) and its leader ... are neophytes excited by the prospect of getting a seat at the top table.
"No doubt back channels are being exhausted explaining what's going on. But while success seems to be the most likely outcome nothing is certain from this Trump-Kim meeting."
Pyongyang's shock announcement came as investors are juggling several other global issues, including the outcome of Trump's decision to pull out of the Iran nuclear deal, ongoing turmoil in the Middle East and the China-US trade spat.
There are hopes for a positive conclusion to the tariff stand-off between Washington and Beijing, but the latest round of talks will be closely monitored after a previous high-level meeting ended with no agreement and both sides far apart.
Key figures around 0720 GMT
Tokyo - Nikkei 225: DOWN 0.4 percent at 22,717.23 (close)
Hong Kong - Hang Seng: DOWN 0.2 percent at 31,083.22
Shanghai - Composite: DOWN 0.7 percent at 3,169.57 (close)
London - FTSE 100: FLAT at 7,723.57
Euro/dollar: DOWN to $1.1830 from $1.1838 at 2100 GMT
Pound/dollar: DOWN to $1.3495 from $1.3506
Dollar/yen: UP to 110.30 yen from 110.33 yen
Oil - West Texas Intermediate: DOWN 30 cents to $71.01
Oil - Brent North Sea: DOWN 27 cents to $78.16 per barrel
New York - Dow: DOWN 0.78 percent to 24,706.41 (close)
Published : May 16, 2018
By : Agence France-Presse Hong Kong