By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Most Asian markets fluctuated between modest gains and losses in choppy trading Monday, with worries about the Federal Reserve's policy outlook and rising U.S Treasury yields weighing on sentiment.

Japan's Nikkei Stock Average ending the morning session 0.1% higher, and Australia's S&P/ASX 200 also advanced 0.1%, after a string of recent losses. Both benchmarks changed direction a few times during the day.

Hong Kong's Hang Seng Index was little changed and the Shanghai Composite lost 0.3%, after also seesawing between positive and negative territory.

Elsewhere, South Korea's fell 0.2%, and Taiwan's Taiex shed 0.3%.

"Recent weakness in U.S. equity markets appears to have been largely about positioning for the Fed to make a first step in the process of winding back its quantitative easing in September," said CMC Markets chief market analyst Ric Spooner.

The performance in Asia came after U.S. stocks ended lower on Friday, handing the Dow Jones Industrial Average its worst weekly performance of the year. Meanwhile, the yield on the 10-year Treasury rose to hit the highest level in two years amid jitters over monetary policy.

"Given this market context, traders will focus on ... [Federal Reserve meeting minutes, due out Wednesday] for any clearer signs on the probability of a Fed move," Spooner said.

Hong Kong property developers suffered from the weak U.S. cues, with Sun Hung Kai Properties Ltd. (SUHJF) losing 0.7%, and Sino Land Co. (SNLAY) giving up 0.5%.

Mainland Chinese developers also weakened despite data showing a further improvement in Chinese home prices last month. Prices of new homes rose in 62 of 70 large and medium-sized Chinese cities in July from their levels in June, data from the National Bureau of Statistics showed Sunday.

Gemdale Corp. lost 3.2% in Shanghai, while the yuan-denominated shares of China Vanke Co. eased 0.7% in Shenzhen, and China Overseas Land & Investment Ltd. (CAOVY) shed 0.6% in Hong Kong.

The choppy trade in Shanghai followed extreme volatility witnessed Friday after a large unintended trade was executed at a mid-sized trading firm, Everbright Securities Co. The China Securities Regulatory Commission said in a statement Sunday the trading glitch was caused by design defects and the transaction system at Everbright, rather than by human error.

Shares of Everbright remained under a trading halt Monday, following news the mid-sized brokerage firm lost 194 million yuan ($31.7 million) from that trading glitch.

In Tokyo, steel makers and some automobile firms dropped even as the yen briefly weakened after data showing the country's trade deficit widened sharply in July from the year-ago period.

Suzuki Motor Corp. (SZKMY) dropped 1.2%, and JFE Holdings Inc. (5411.TO) retreated 1.4%.

However, shares of Kawasaki Heavy Industries Ltd. (KWHIY) rose 1.1% after the Nikkei newspaper reported the company will team up with Rolls-Royce Holdings PLC (RYCEY) to develop a new aircraft engine that is more fuel-efficient.

The market in Sydney suffered a drag from shares of Commonwealth Bank of Australia (CBAUY), which dropped 2.8%, and telecommunications major Telstra Corp. (TLSYY), which declined 3.4%, as both stocks traded without rights to a dividend.

BlueScope Steel Ltd. (BLSFY) sank 15.5% after it said it doesn't expect a better outcome for the first half of 2014 than it had in the second-half of 2013. BlueScope's annual loss narrowed to 84.1 million Australian dollars (AUDUSD) ($77.3 million).

On the upside in Asia, however, energy producers gained after oil prices rose Friday in the U.S.

In Tokyo, Japan Petroleum Exploration Corp. climbed 1.1%, and Inpex Corp. (IPXHF) added 0.8%.

Likewise, Woodside Petroleum Ltd. (WOPEY) gained 1.5% in Sydney, and Cnooc Ltd. (CEO) rose 1.2% in Hong Kong.

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