Portugal Colonial - Most Asian markets drop as traders weigh US rates outlook

Comments from top Federal Reserve officials suggesting they would like to see a slower pace of rate cuts tempered hopes for another bumper cut at the bank's next meeting, while Middle East worries pushed gold to a new record.

With few catalysts to drive business, investors took a step back Tuesday after the Dow and S&P 500 came off all-time highs, with concerns growing that stocks may be overbought and due a correction.

Focus is now on the latest earnings season, with tech titans Alphabet and IBM due to announce over the next two days, while Boeing, Coca-Cola, General Motors and L'Oreal are also in the pipeline.

Bets on another 50-basis-point rate cut by the Fed have been scaled back after a recent run of strong US data including on jobs creation, while a number of decision-makers have looked to temper expectations.

Kansas City Fed boss Jeffrey Schmid backed a slower pace of easing, which he said would allow it to find a neutral level.

"While I support dialling back the restrictiveness of policy, my preference would be to avoid outsized moves, especially given uncertainty over the eventual destination of policy and my desire to avoid contributing to financial market volatility," he said in prepared remarks Monday.

He was joined by his Dallas counterpart Lorie Logan and Minneapolis Fed boss Neel Kashkari, who wanted officials to proceed carefully.

Still, San Francisco president Mary Daly saw the bank continuing to cut, saying: "So far, I haven’t seen any information that would suggest we wouldn’t continue to reduce the interest rate."

After the tepid lead from Wall Street, Asia struggled.

Tokyo dropped more than one percent, even as the yen softened against the dollar to sit at its weakest level since early August.

Sydney, Seoul, Singapore, Wellington, Taipei and Jakarta also fell.

However, Hong Kong and Shanghai rose, with dealers hoping for more stimulus from China's government after a slew of announcements over the past month.

Gold continued to rise to new highs, hitting a record $2,740.59 at one point on Monday, as traders sought out the safe haven amid worries about the Middle East crisis as Israel considers its response to Iran's missile barrage this month.

Uncertainty over the US presidential election next month has also helped fuel bullion's rally.

Concerns about a possible wider conflict in the Middle East lifted oil prices at the start of the week, though they dipped slightly in Asian trade Tuesday.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: DOWN 1.4 percent at 38,399.47 (break)

Hong Kong - Hang Seng Index: UP 0.6 percent at 20,596.63

Shanghai - Composite: UP 0.3 percent at 3,278.38

Euro/dollar: DOWN at $1.0820 from $1.0818 on Monday

Pound/dollar: DOWN at $1.2991 from $1.2982

Dollar/yen: UP at 150.74 yen from 150.82 yen

Euro/pound: DOWN at 83.28 pence from 83.30 pence

West Texas Intermediate: DOWN 0.4 percent at $70.27 per barrel

Brent North Sea Crude: DOWN 0.4 percent at $74.03 per barrel

New York - Dow: DOWN 0.8 percent at 42,931.60 (close)

London - FTSE 100: DOWN 0.5 percent at 8,318.24 (close)

V.F.Barreira--PC