Asia loses steam
A pedestrian holding an umbrella stands in front of a stock quotation board showing various countries' stock prices outside a brokerage in Tokyo. .

Asian markets outside China were down in early trade, pulled down by news that the US Federal Reserve could decrease its asset buys in the coming months, and by Chinese data that pointed to contracting factory activity in that country.

Japan's Nikkei average plunged 2.64% or 412.44 points to 15214.82. China, the world's second largest economy, is a major export market for Japan, the world's third largest economy.

The Hang Seng was down 1.64% or 381.34 points to 22879.74, while South Korea's Kospi dipped 0.62% or 12.27 points to 1981.56 and Australia's S&P/ASX shed 1.60% or 82.70 points to 5082.70 while China's Shanghai composite index inched up 0.07% or 1.52 points to 2303.92.

US Fed chief Ben Bernanke, in his testimony to Congress, suggested the US central bank could scale down its bond buying programme in the "next few meetings." His comment hit stocks on Wall Street, which extended its losses as minutes of the Fed meeting showed that several Federal Reserve officials were in favour of slowing down bond-buying as early as the June meeting.

In China, factory activity contracted in May, a first in seven months. HSBC's preliminary purchasing managers' index (PMI), which surveys purchases made by factory managers, fell to 49.6 in May from a final 50.4 in April. A reading below 50 signals contraction.

Bernanke's comments pushed the dollar to a new 52-week high of ¥103.74 on 22 May. The Japanese yen was trading at 102.65 at 2:01 pm Japanese time.

In Tokyo, Japanese life insurers gained after the Nikkei newspaper reported that a weaker yen in the financial year ending 31 March helped them narrow their negative spreads - the difference between returns they promised and earned.

T&D Holdings jumped 4.7% while Dai-ichi Life Insurance rose 0.8%. Shares of Fast Retailing moved up 3.9%, while Fanuc Corp gained 3.1%. Sumitomo Mitsui Trust Holdings was down 2.5%. The dollar hovered around ¥103.

In Sydney, iron-ore producer Fortescue Metals Group shed 3.2%, while gold miner Newcrest Mining and Commonwealth Bank of Australia both lost 2.5%

In Seoul, Korea Zinc lost 3.4%, while KB Financial Group was down 0.7%

China Construction Bank was down 1.4%, while Bank of Communications lost 1.9% in Hong Kong and 0.8% in Shanghai. Jiangxi Copper Co fell 2.4% while Cnooc was down 2.2.

On Wall Street, all three benchmarks were down. The Standard & Poor's 500 Index lost 0.8%, the Dow Jones Industrial Average was down 0.5% and the Nasdaq Composite dropped 1.1%.