Asian markets were mostly lower on Wednesday as China's move to reopen after abandoning its zero-Covid policy revived inflation fears.

China has abruptly reversed tight pandemic restrictions that kept the world's second-largest economy isolated for the past three years.

On Monday, Beijing announced it was ending quarantine measures for overseas arrivals from January 8, the latest move to loosen its zero-Covid regime, after it dropped mandatory testing and lockdowns earlier this month.

China's scrapping of pandemic restrictions has spurred hopes for its economic revival but also raised fears it will add to inflationary pressure.

Moving to reopen even as the Asian giant battles a massive spike in Covid cases has caused jitters, with the United States and several other countries saying they may restrict travel from China and introduce mandatory PCR tests for arrivals.

"While a full China reopening could provide a much-needed and timely boost to the global economy, it may come with unwelcome ambiguous strings attached," said Stephen Innes of SPI Asset Management.

"The good news is that inflation subsides as China reprises its role as a supplier of low-cost goods globally and supply chain bottlenecks ease," he added.

"Still, the bad news is as growth accelerates through Q1, China's insatiable demand for raw materials and all things energy will push up prices of those commodities, much to the consternation of the Fed and ECB. Indeed, reopening is rekindling some inflationary spirits."

Fresh data last week indicated a slowing of US inflation, but the news was not definitive and eyes will be on how the Federal Reserve moves to balance inflationary concerns alongside the possibility of a recession caused by increased borrowing costs.

"We may get a pivot later on next year from the Federal Reserve where they actually start cutting rates, but that's going to happen when the situation is going to become much more dire than it is now," Matt Maley, chief market strategist for Miller Tabak, said on Bloomberg TV.

"If we just have this slow grind lower, the Fed's going to keep interest rates at high levels even if they stop raising rates in any kind of way."

Asian markets mostly headed south, with Tokyo giving up 0.4 percent, Seoul sliding more than 2.2 percent and Shanghai down 0.3 percent. Sydney, Singapore, Kuala Lumpur, Jakarta and Taipei also retreated while Wellington and Bangkok were among the few gainers.

Hong Kong jumped 1.6 percent as investors digested the Covid news from Beijing on the first trading day after the Christmas break, with China-related stocks, Macau casino operators and technology issues seeing big gains.

Hong Kong chief executive John Lee also announced a further easing of the city's remaining Covid measures.

Markets opened higher in Europe, with London back after a long Christmas break. London advanced 0.8 percent, Frankfurt added 0.1 percent and Paris was up 0.2 percent.

Oil prices slipped in Asian trade after China's moves to reopen had given them a boost on hopes for renewed demand from the world's biggest importer of crude.

Russia's move to ban exports to countries complying with a price cap on its crude had also helped drive prices higher.

US benchmark West Texas Intermediate was down 0.5 percent while international benchmark Brent slipped 0.8 percent to below $84 a barrel.

- Key figures around 0810 GMT -

Tokyo - Nikkei 225: DOWN 0.4 percent at 26,340.50 (close)

Hong Kong - Hang Seng Index: UP 1.6 percent at 19,898.91 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,087.40 (close)

London - FTSE 100: UP 0.8 percent at 7,531.98

Dollar/yen: UP at 133.93 yen from 133.44 yen on Tuesday

Euro/dollar: DOWN at $1.0643 from $1.0644

Pound/dollar: UP at $1.2045 from $1.2030

Euro/pound: DOWN at 88.36 pence from 88.44 pence

Brent North Sea crude: DOWN 0.8 percent at $83.70 per barrel

West Texas Intermediate: DOWN 0.5 percent at $79.11 per barrel

New York - Dow: UP 0.1 percent at 33,241.56 (close)

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