Asian markets wobbled Tuesday after a two-day rally as profit-takers stepped in and traders weighed the chances of the Federal Reserve skipping an interest rate hike this month.

The tepid performance came after a global advance stumbled in New York and Europe on Monday, with a below-par read on US services sector activity hinting at weakness in a key area of the economy.

Analysts also warned that with the US borrowing ceiling now lifted, the Treasury is expected to unleash a flood of debt onto the market as it looks to restock its coffers, sucking cash from the financial system and putting pressure on liquidity.

Sylvia Jablonski, of Defiance ETF, told Bloomberg Television that such a move that soaks up money "is something that will probably keep us in a range-bound mode until we see where it all lands, including the Fed's final decision on rates".

Traders have been broadly upbeat after a "Goldilocks" jobs report Friday that was neither too good nor too bad suggested the economy was not facing an immediate risk of a recession and could still give the Fed room to hold policy steady next week.

There is a growing hope that the central bank will decide against a hike but flag a resumption in July as officials try to bring inflation down while limiting damage to the economy and the troubled banking sector.

But observers point out that there is some disagreement within the policy board on the best way forward, while the decision comes a day after the release of consumer price figures, which could have an impact on policymakers' vote.

Still, Stephen Innes at SPI Asset Management said: "Ultimately, if the Fed chooses to pause the rate hike cycle at the June meeting, the table may be set for a continuation of a 'not too hot/not too cold' environment conducive to stock picking."

Asian markets were mixed.

Hong Kong reversed early gains of more than one percent after a healthy two-day rally, and there were also losses in Shanghai, Sydney, Singapore, Manila and Mumbai.

But Tokyo, Taipei, Wellington, Bangkok and Jakarta were in the green, while London, Paris and Frankfurt opened down.

Sydney dropped around one percent after Australia's central bank announced a 25-basis-point rate hike and said more could be in the pipeline owing to persistently high inflation.

The Australian dollar jumped more than one percent against the US dollar.

Oil prices fell more than one percent, having seen a rally on Monday peter out, even after Saudi Arabia announced a surprise one-million-barrel cut to output for next month.

The weakness in the commodity comes as investors fret over the impact on demand from rising interest rates and slowing economic activity, particularly in China, which is struggling to kick on after reopening from zero-Covid at the end of last year.

- Key figures around 0715 GMT -


Tokyo - Nikkei 225: UP 0.9 percent at 32,506.78 (close)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 19,066.64

Shanghai - Composite: DOWN 1.2 percent at 3,195.34 (close)

London - FTSE 100: DOWN 0.2 percent at 7,588.24

Euro/dollar: UP at $1.0727 from $1.0708 on Friday

Dollar/yen: DOWN at 139.36 yen from 139.54 yen

Pound/dollar: UP at $1.2438 from $1.2431

Euro/pound: UP at 86.24 pence from 86.15 pence

West Texas Intermediate: DOWN 1.2 percent at $71.27 per barrel

Brent North Sea crude: DOWN 1.1 percent at $75.89 per barrel

New York - Dow: DOWN 0.6 at 33,562.86 (close)