CORRECTED-GLOBAL MARKETS-Asia shares subdued after May's Brexit vote defeat, pound steadies

Asian shares took a breather on Wednesday after rallying the previous day on Chinese stimulus hopes, with investors assessing Brexit options after British lawmakers trounced Prime Minister Theresa May's deal to withdraw Britain from the European Union. May's crushing loss overnight triggered political upheaval that could lead to a disorderly exit from the European Union on March 29 or even to a reversal of the 2016 decision to leave. Investors' short-term focus is now on a confidence vote on May's government by lawmakers later in the day.

Sterling was last trading at $1.2841 on the dollar, off about 0.1 percent. It had rallied more than a cent from the day's lows against the dollar with the sizable defeat for May seen forcing Britain to pursue different options. "Elections tend to cause sell offs in markets because they're inherently uncertain events but the UK situation is more complex than a normal vote," said Stephanie Kelly, senior political economist at Aberdeen Standard Investments in Edinburgh.

"The margin of Theresa May's defeat and the call of no confidence do matter for markets in the short term," she said adding she expected sterling to be volatile until the result of the no-confidence vote is known. May's defeat put pressure on UK-focused exchange-traded funds. A Tokyo-traded FTSE 100 ETF was down about one percent on Wednesday.

MSCI's broadest index of Asia-Pacific shares outside Japan was a touch lower, having swung up on Tuesday after Chinese officials came out in force to signal more measures to stabilise a slowing economy. Australian shares rose 0.2 percent while Japan's Nikkei lost 0.7 percent by midday. China's blue-chip CSI300 index of Shanghai and Shenzhen shares fell 0.1 percent on Wednesday. Despite the small loss, it managed to hold on most of the previous session's gains, when it rose nearly 2 percent. China's central bank on Wednesday made its biggest daily net cash injection via reverse repo operations on record -- totalling $82.73 billion -- in another sign of growing concern over risks facing the slowing economy.

In Tuesday's session on Wall Street, the S&P 500 gained 1.1 percent as technology and internet stocks gained on Netflix Inc's plans to raise fees for U.S. subscribers. The S&P 500 communication services index, which includes Netflix and Alphabet Inc, jumped 1.7 percent, while the technology sector tacked on 1.5 percent. The China stimulus hints and dovish remarks by one of the U.S. central bank's most hawkish policymakers also helped lift the U.S. market. Ester George, president of the Federal Reserve Bank of Kansas City and a voting member of the Fed's policy-setting committee this year, made the case for patience and caution on interest rate hikes to avoid choking off growth.

SINO-U.S. TRADE TALKS

Sentiment was not helped by reported comments from United States Trade Representative Robert Lighthizer that he did not see any progress made on structural issues during U.S. talks with China last week. Investors "are mainly focused on the outcome of the U.S.-China trade negotiations, but it may take more than a month before it will become clear," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. "It's hard for market sentiment to turn one way or the other, whether a recovery or decline, as long as it remains unclear what outcome there will be."

Lighthizer's caution helped force the dollar to remain on the defensive against the Japanese yen, a safe-haven currency that's often preferred by traders during times of market and economic stress. The greenback lost 0.2 percent at 108.50 yen. Elsewhere in the currency market, the euro lost 0.1 percent to $1.1405, extending its decline against the dollar for a fifth session. The single currency has lost nearly 1.5 percent from a 12-week high hit on Jan. 10.

U.S. Treasuries steadied after a choppy overnight session. The yield on benchmark 10-year notes last stood at 2.711, a tad lower from 2.718 percent at the U.S. close on Tuesday. In commodities, oil prices rose about 3 percent overnight supported by China's promise of more stimulus. Worries over slowing China demand have been one of the key factors in the recent slide in oil. International Brent crude oil futures were last off 7 cents, or 0.1 percent, at $60.57 a barrel. U.S. crude futures were down 12 cents, or 0.2 percent, at $51.99 a barrel. Spot gold was 0.1 percent lower at $1,288.40, holding not far off a seven-month peak of $1,298.60 scaled on Jan. 4. 

(With inputs from agencies.)