U.S. stocks fell after jobless claims showed that the labor market is still strong, complicating the picture for the Federal Reserve's rates path.
The S&P 500 fell 1.9%, the tech-focused Nasdaq Composite Index dipped about 2.1%, and the Dow Jones Industrial Average dropped about 1.7%.
The Labor Department said worker filings for U.S. unemployment benefits jumped more than 10% last week. But jobless claims are still historically low as demand for labor outstrips the number of people looking for work. The monthly jobs report, which is closely watched by investors, will be released Friday.
Earlier, in Asia, Japan's Nikkei Stock Average rose 0.6% -- its highest level since Aug. 26. Gains were led by electronics and financial stocks thanks partly to the yen's recent weakness.
Chinese shares ended lower after the country released muted February inflation data, indicating weak consumer demand. Consumption and insurance stocks weighed on the market while telecom names were higher in volatile trading. The benchmark Shanghai Composite Index ended 0.2% lower. The Shenzhen Composite Index fell 0.1% and the ChiNext Price Index declined 0.2%.
Elsewhere, New Zealand's NZX-50 closed 0.25% lower as concern over interest rates and inflation kept the benchmark index on course for its longest run of weekly losses in more than two years.
And Australia's S&P/ASX 200 closed 0.1% higher as strength in the financial and tech sectors helped offset losses among mining stocks. The tech sector rose 2.7%, as accounting software provider Xero surged 11% on the announcement of cost cuts aimed at boosting profitability.