HONG KONG - Asian markets were mostly lower on Wednesday as tensions in Iraq dampened buying sentiment and investors await the outcome of the US Federal Reserve's policy meeting later in the day.
The dollar extended gains against the yen after climbing in New York on news that US inflation rose in May at its fastest pace for more than 18 months.
Tokyo rose 0.93 percent, or 139.83 points, to 15,115.80, with the weaker yen helping the Nikkei to a second day of gains.
But Seoul lost 0.60 percent, or 12.06 points, to 1,989.49 and Sydney fell 0.33 percent, or 17.97 points, to 5,382.7.
In the afternoon Hong Kong was flat and Shanghai was down 0.61 percent.
With few other catalysts to drive trade, investors are watching events in Iraq as militants bear down on Baghdad after taking control of a number of towns and cities.
On Tuesday Prime Minister Nuri al-Maliki sacked several top security commanders after government forces crumbled in the jihadist onslaught which the UN has warned risks breaking up the country.
President Barack Obama has sent troops to Baghdad to strengthen security for the US embassy and is weighing potential military options, including air strikes, to counter the rebels.
The fighting has raised fears about oil supplies from the country. International prices are already at nine-month highs.
In afternoon Asian trade the US benchmark, West Texas Intermediate for July delivery, gained 16 cents to US$106.52 (S$133.60), while Brent crude for August eased 23 cents to US$113.22.
The Fed will wrap up a two-day policy meeting later in the day. While policymakers are widely expected to continue winding down their stimulus, investors will be watching to see if Fed chief Janet Yellen gives any hints about future policy.
Of particular interest is the future of interest rates. While the bank has consistently said it will hold rates at record lows well into next year, it still faces rising inflation and a pick-up in the jobs market.
On Tuesday data showed US inflation at 2.1 percent in May, its highest since October 2012.
The news lifted the dollar in US trade to 102.13 yen from the 102.00 yen earlier Tuesday in Asia.
On Wednesday in Tokyo the greenback bought 102.24 yen, while the euro fetched US$1.3543 and 138.49 yen against US$1.3546 and 138.35 yen in New York.
On Tuesday the Dow rose 0.16 percent, the S&P 500 gained 0.22 percent and the Nasdaq climbed 0.37 percent.
Gold fetched US$1,268.28 an ounce at 0600 GMT in Asia compared with US$1,265.00 late Tuesday.