U.S. President Donald Trump accused China and Europe of manipulating their currencies.
TOKYO: Asian stocks were capped and the dollar dipped on Tuesday after U.S. President Donald Trump accused China and Europe of manipulating their currencies and said he was "not thrilled" with the Federal Reserve for hiking interest rates.
Keeping global trade conflict concerns on the boil, Trump said in an interview with Reuters on Monday that China was manipulating the yuan to make up for having to pay tariffs imposed by Washington on some imports from China.
He also said he believed the euro was being manipulated.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.02 percent.
Australian stocks lost 0.7 percent, South Korea's KOSPI nudged up 0.1 percent and Japan's Nikkei fell 0.6 percent.
Wall Street's major indexes rose on Monday on optimism over trade talks between the United States and China, though they fell from session highs after Trump's comments.
Immediate focus was on the lower-level trade talks due to start later on Tuesday between the United States and China. Speculation that the talks might help ease trade tensions has shored up the broader equity markets over the past few sessions.
In currencies, the dollar came under pressure after Trump reiterated his displeasure at the Fed's rate hikes, saying the central bank should do more to help him boost the U.S. economy.
"While Trump's displeasure for rising interest rates is nothing new, and the Fed maintains full operational independence, markets remain attentive to such comments," wrote strategists at ANZ.
The dollar index against a basket of six major currencies was down 0.2 percent at 95.714, extending losses from the previous day.
The euro brushed an 11-day high of $1.1493, stretching its gains after climbing about climbing about 0.35 percent overnight.
The U.S. currency slipped to 109.84 yen, its lowest since late June.
The offshore Chinese yuan was a shade firmer at 6.831 per dollar after dipping slightly the previous day.
Yield on the 10-year U.S. Treasury note was near a six-week low of 2.807 percent plumbed overnight in the wake of Trump's interest rate comments.
Oil prices extended their overnight rise, with U.S. crude futures up 0.33 percent at $66.65 per barrel. Crude rose on Monday after weeks of declines, as investors grew more concerned about an expected fall in supply from Iran due to U.S. sanctions. - Reuters
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