Eyes were on the world's biggest economy after the Federal Reserve said on Wednesday that while conditions were improving, the gains were "modest."

The tepid assessment pushed most Asian markets lower, with Tokyo's Nikkei closing down 0.59 percent, or 57.25 points, at 9,696.02.

Sydney ended down 0.13 percent, or 5.8 points, at 4,524.1, while Hong Kong was 0.11 percent lower by the break.

The losses came after four days of broad gains, which had been led by buying in banks after upbeat news from European stress tests last week and reports that planned tighter regulation of the global banking industry had been watered down.

Markets yesterday were following a 0.38 percent drop on the Dow, which came after an anticipated Beige Book report turned out more pessimistic than the previous survey. That came on top of concerns about high unemployment and weak business confidence.

In other markets:

Seoul closed 0.15 percent, or 2.59 points, lower at 1,770.88.

Taipei gained 0.18 percent, or 14.18 points, to close at 7,798.99.

Smartphone maker HTC, which said this week it plans to sell phones in China under its own brand, rose seven percent to NT$570.

Taiwan Semiconductor Manufacturing Company was flat at 63.00.

Manila closed 0.65 percent, or 22.44 points, lower at 3,429.35.

Philippine Long Distance Telephone led the way down, shedding 0.16 percent to 2,434 pesos.

Ayala Corp. dropped 2.34 percent to 317 pesos and property issue Megaworld retreated 4.35 percent to 1.54 pesos.