Passersby walk past in front of electronic boards showing Japan's Nikkei share average (L), the Japanese yen's exchange rate against the US dollar (C), British pound (R) and Euro (2nd R) outside a brokerage in Tokyo, Japan, July 6, 2016. REUTERS

TOKYO: Asian stocks stepped back early on Wednesday after a record run on Wall Street showed signs of petering out, while the dollar hovered near a four-month high against a basket of currencies following upbeat US data.

Global risk appetite, which has recovered rapidly from the Brexit shock late in June, received a sobering reminder after the International Monetary Fund (IMF) cut its global growth forecasts for the next two years on Tuesday, citing uncertainty over Britain's looming exit from the European Union.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent, putting some distance between a nine-month high struck late last week.

South Korea's Kospi lost 0.3 percent and Japan's Nikkei fell 0.7 percent, on track to snap a six-day winning streak. Australian shares bucked the trend and rose 0.4 percent.

"The US dollar is proving to be a big winner in a period when central banks around the world are talking about easing," wrote Kathy Lien, managing director of FX strategy for BK Asset Management.

"That leaves the Federal Reserve and the Bank of Canada as the lone soldiers standing ground on steady policy. We haven't seen significant strength in the Canadian dollar, partly because oil prices have been falling but the US dollar is seeing nice momentum."

The S&P 500 pulled back from record highs on Tuesday, while the Dow industrials edged up for an eighth straight day of gains, as investors pondered mixed earnings reports. [.N]

The dollar index, a gauge of the greenback's strength against a basket of key currencies, stood at 97.097, after touching a four-month peak of 97.158. Tuesday's stronger-than-expected June US housing starts data has given the dollar a lift.

The dollar traded at 105.89 yen after touching a one-month high of 106.53 overnight. Expectations that the Bank of Japan would ease monetary policy later this month have weighed on the yen. The euro was steady at $1.1009 after slipping to a three-week trough of $1.1000.

The Australian dollar stood nearly flat at $0.7504 after falling 1.1 percent on Tuesday, when it was dragged down by a New Zealand dollar weakened by growing speculation that the country's central bank it will cut rates in August.

Fed funds futures rates show investors see almost a 50/50 chance that the US central bank raises rates by its December meeting, according to CME Group's FedWatch tool, compared with less than 20 percent a few weeks ago.

Geopolitical risks also loom as a factor for markets. The Turkish lira came under renewed pressure and fell to its lowest level since last September amid reports of a widening purge in Turkey after an abortive coup last week.

US crude slipped 0.2 percent to $44.58 a barrel after falling more than 1 percent on Tuesday, as a rallying dollar and a global fuel glut offset forecasts for lower US crude stockpiles that typically would have been bullish for the market.

Elsewhere in commodities, profit taking nudged nickel away from a 10-month high reached overnight amid persistent concerns over a Philippines mining crackdown. Zinc edged up to a 14-month peak on worries over falling mine output.