Asian shares unwound early gains on Wednesday, as investors turned cautious following renewed selling in recently battered crude oil futures.
MSCI's broadest index of Asia-Pacific shares outside Japan erased a positive start to edge down 0.1 per cent, on track for a flat monthly performance and down 12 per cent for the year.
US crude futures skidded 1.8 per cent to $37.19 a barrel, while Brent shed 1.2 per cent to $37.32. Both had jumped 3 per cent overnight, taking back ground lost in the previous session as colder weather forecasts raised expectations of more demand.
But weekly data from industry group the American Petroleum Institute (API) showed a rise of almost 3 million barrels in U.S. crude inventories, defying expectations of no change and rekindling fears of a supply glut.
On Wall Street, major US indexes each gained more than 1 per cent. All 10 major S&P sectors ended with gains, led by a 1.34 per cent rise in the technology sector, which lifted the S&P 500 to a modest increase for the year.
Japan's Nikkei was up 0.3 per cent, off session highs but still poised to gain over 9 per cent for the year, though down more than 3 per cent for December.
"We're seeing thin volumes at year-end as the number of active participants has decreased due to the holidays," said Martin King, co-managing director at Tyton Capital Advisors.
Australian shares outperformed, up 0.9 per cent and on track for their ninth consecutive day of gains.
Higher US Treasury yields underpinned the dollar overnight, although yields were off highs in Asia.
The yield on benchmark 10-year US Treasury notes stood at 2.292 per cent, compared with its US close of 2.307 per cent on Tuesday.
The yield on the US two-year note closed at 1.095 per cent on Tuesday after earlier touching its highest level since April 2010.
The dollar index, which tracks the greenback against a basket of six rival currencies, was up 0.1 per cent at 98.207.
The index rose to nearly a one-week high of 98.413 on Tuesday, from a nearly two-week low earlier in the session. It is up 8.8 per cent for the year, though down nearly 2 per cent for the month as investors pare their dollar-long positions after the U.S. Federal Reserve's widely anticipated interest rate increase earlier in December.
The dollar was steady at 120.47 yen, while the euro edged up 0.1 per cent to $1.0928.
The Australian dollar, meanwhile, slipped about 0.2 per cent to $0.7280 as the renewed selling in crude prices prompted investors to lock it gains on its rise to $0.7303 overnight, its highest since December 10.
The New Zealand dollar was down 0.3 per cent at $0.6855 , after it scaled a 10-week peak of $0.6881 in the previous session.
Spot gold edged up about 0.2 per cent to $1,070.61 an ounce, but remained poised to drop more than 9 per cent for 2015 to log its third year of losses.