Oil prices built on their rally the previous day after deadly blasts in Iran that Tehran described as a "terrorist attack" fanned geopolitical fears and added to already high tensions in the Middle East.
The global rally that characterised the last months of 2023 has petered out at the start of the new year owing to worries the buying may have run a little ahead of itself, leading traders to take a breather.
The selling pressure was enhanced Wednesday when the Fed minutes showed officials expect to keep rates elevated for some time as they want to make sure they have inflation under control.
That dealt a blow to confidence on trading floors, where investors had been betting on a cut as soon as March after the bank's post-meeting statement last month showed they envisioned three reductions in 2024.
"Participants viewed the policy rate as likely at or near its peak for this tightening cycle," the minutes said, adding there was growing optimism among decision-makers that there was "clear progress" on inflation, which continues to fall.
Officials were keen to begin cutting this year but gave no indication of when.
Still, data Wednesday provided fresh evidence that policymakers' measures were kicking in but not enough to send the economy into a recession, with job openings falling in December, while the factory sector remained in contraction.
Focus now turns to the release of key non-farm payrolls data due on Friday.
"Overall, the labour market remains strong, but demand is cooling, coming into better balance with supply," said Rubeela Farooqi at High Frequency Economics.
"These data will be welcome news for policymakers and support the Fed's view that the next move in rates will be lower, likely in the second quarter."
- Oil rallies further -
Laura Rosner-Warburton, of Macropolicy Perspectives, added: "What December taught us is they are willing to pivot."
Meanwhile, Richmond Fed boss Tom Barkin said the likelihood of a so-called soft landing was "increasingly conceivable but in no way inevitable".
Wall Street's three main indexes all fell, with the Nasdaq down more than one percent as tech firms continue to retreat after a strong advance in recent weeks.
And Asia was no different, though traders pared morning losses while some bounced back.
Tokyo dipped on Japan's first day back from a long break, while there were also losses in Shanghai, Sydney, Seoul, Singapore, Taipei and Bangkok.
Wellington, Manila, Mumbai and Jakarta rose while Hong Kong was flat.
London, Paris and Frankfurt rose at the open.
Oil prices jumped again, having climbed more than three percent higher Wednesday after twin bomb blasts ripped through a crowd commemorating Revolutionary Guards general Qasem Soleimani, who was killed four years ago in a US strike in Iraq.
The explosions, which killed at least 95 people, came with tensions already sky-high in the crude-rich region owing to Israel's Gaza war and following the killing of Hamas's deputy leader in Lebanon this week.
They added to supply concerns after the closure of a Libyan oil field.
The "attack has the potential to heighten instability in the already volatile region, which has experienced conflicts such as the Hamas-Israeli war, attacks by the Houthi militia on commercial vessels in the Red Sea, and ongoing violence in Iraq, Syria, and this week, in Beirut", said SPI Asset Management's Stephen Innes.
"Yet, unless a substantial supply disruption occurs in the Middle East, poor macroeconomic data could act as the ultimate rally dampener."
- Key figures around 0810 GMT -
Tokyo - Nikkei 225: DOWN 0.5 percent at 33,288.29 (close)
Hong Kong - Hang Seng Index: FLAT at 16,645.98 (close)
Shanghai - Composite: DOWN 0.4 percent at 2,954.35 (close)
London - FTSE 100: UP 0.4 percent at 7,713.41
West Texas Intermediate: UP 0.9 percent at $73.32 per barrel
Brent North Sea Crude: UP 0.6 percent at $78.74 per barrel
Dollar/yen: UP at 143.36 yen from 143.24 yen on Wednesday
Euro/dollar: UP at $1.0940 from $1.0925
Pound/dollar: UP at $1.2686 from $1.2668
Euro/pound: UP at 86.24 pence from 86.22 pence
New York - Dow: DOWN 0.8 percent at 37,430.19 points (close)
dan/tym
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