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Australian banking stocks fell sharply after ANZ Banking Group said it was selling shares at a discountANZ Banking Group

Asian markets traded mostly lower despite a positive lead from Wall Street, where US shares closed higher.

Investors were concerned by comments from Atlanta Federal Reserve president Dennis Lockhart suggesting the US central bank could hike interest rates as early as in September.

Hong Kong's Hang Seng index slipped 0.5% to 24,404.38 at mid-day, while mainland China's Shanghai Composite benchmark fell 0.3% to 3,682.31 points.

Earlier, the Institute for Supply Management said its US services sector index shot up to a decade high of 60.3 in July from 56 in June, well beyond analyst expectations for a 56.2 reading.

A reading above 50 indicates expansion.

"This will be interpreted as very good news for the Fed and will be seen as further confirmation of progress towards meetings its growth targets," TD Securities economist Cheng Chen told Reuters.

"At this point, we continue to expect the Fed to raise rates at the September meeting."

The Nasdaq and the S&P 500 indices closed 0.6% and 0.3% higher, respectively, while the Dow Jones was flat.

Japan bucks trend

Meanwhile, South Korea's Kospi fell 0.8% to 2,013.87.

In Australia, the S&P/ASX 200 benchmark index slumped 1.4% to 5,593 points after official data showed the country's unemployment rate unexpectedly rose to 6.3% in July from 6.1% in June.

Banking shares took a hit after the Australia and New Zealand Banking Group said it was raising A$3bn (£1.4bn, €2bn, $2.2bn) by selling shares at a 5% discount in order to meet new rules that requires banks to be more resilient to financial shocks.

Japanese shares bucked the regional trend, with the Nikkei climbing 0.7% to 20,751 points.

Several Japanese companies have released strong quarterly earnings reports in recent days helped by a weakening yen.