Last week, heightened worries about inflation, bird flu and the health of the global economy have curbed investors' appetite for risk, resulting in declines across the region and sending once-hot markets such as South Korea's index down 8 percent from a record set earlier in the month.

"Markets' reaction to concerns about inflation are very valid, and I think the reaction we've seen is quite rational. The question is, are we going to see a string of bad news coming through that is going to be driving up bond yields?" said Ben Rudd, a London-based Asian strategist at ABN AMRO.

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"If we don't, and my gut feeling is I don't think we'll see it coming that quickly, then at least we would expect a little stability coming through for these markets, if not potential for a little bit of near-term upside."

Foreign investors have been net sellers in Asia over the last five weeks, with early data pointing to more net selling in the seven days ending Sunday.

"If that is the case, then it will be six consecutive weeks of net foreign selling. Back in September 2000, what we saw was seven consecutive weeks of selling," said Sandy Lee, senior quantitative analyst at Nomura International in Hong Kong.

According to figures from Nomura, foreign investors sold a net US$2.1 billion (HK$16.38 billion) for the seven days ended October 23, the largest weekly sell-off in seven months, with selling in four of the six Asian markets it tracks, namely India, South Korea, Taiwan and Thailand. Tokyo seen narrow Japanese stocks are seen trading in a narrow range, with caution set to prevail as investors eye the US Federal Reserve's Federal Open Market Committee meeting.

"The market is still in a correction phase. Uncertainty over the US economic outlook is becoming more murky," said Tsuyoshi Segawa, equity strategist at Shinko Securities.

"I don't expect the market to fall much, but it may become directionless as I expect buying from foreign investors to wane." Caution to cap Seoul rise The benchmark KOSPI is seen rebounding from four consecutive weeks of declines, with investors seen drawn to more attractive valuations.

But strong gains could be capped, with investors wary ahead of the Fed meeting and a slew of earnings results. Local participants were also seen reacting to any big Wall Street movements, analysts said.

"After a steep correction, the market will likely resume its rising trend," said Chohung Investment Trust Management fund manager Kim Seong Ki. Rates watch for Hang Seng Hong Kong shares are expected to hold near current three-month lows ahead of the US rate meeting, with investors watching whether banks will track a highly anticipated US rate rise.

"Hong Kong banks are very likely to raise their prime rates by more than the 25 basis points expected from the Fed. The market has not yet priced in this factor," said Capital Securities research head Philip Chan.

Earnings from mainland companies CNOOC and Lenovo Group, both Hang Seng Index constituents, will also be closely watched. Tight trade for Taipei Taiwanese stocks will probably trade within a narrow range before large-cap microchip designer Mediatek Technology releases its third-quarter results, analysts said.

Political uncertainties over the December 3 election for local governments will also continue to weigh on the market.

"Taiwan market will stay quiet for most of the time before the election," said Chiang Chen-sheng, a manager at Masterlink Investment Advisory. Bargains may buoy Sydney Australian shares are expected to rise, led by infrastructure and mining stocks such as Rio Tinto, as investors look for bargains after a 6 percent fall in the index from its peak on September 30.

"Infrastructure-related stocks should be in demand now that the local inflation worries have subsided somewhat," said David Walsh, a portfolio manager with Barclays Global Investors.

Fund managers are also awaiting annual general meetings to get a feel about business sentiment, and are eyeing banking stocks ahead of their reporting season. Singapore outlook dims Singapore corporate earnings will continue to dominate market sentiment in the city-state, but some analysts say the market is in a downtrend, hurt by concerns over rising interest rates and slow economic growth at home and abroad.

"There is a sense of caution as we are in the middle of the reporting season," said Timothy Wong, head of research at DBS Vickers Securities.

"But overall the Singapore market has been coming off, mainly due to global macro concerns, worries about rising interest rates and slowing economic growth," he said. Holiday mood in Mumbai Indian stocks are seen remaining under pressure, with trading volumes likely to be affected by a few public holidays.

"Next week could also be a washout and the volumes could be very low due to holidays," said Jaideep Goswami, head of equities at HDFC Securities. "The gloomy global equity markets are making things worse for us." But he said there could be a relief rally, since the index has fallen about 12 percent from the all-time high hit early this month.

Foreign investors have sold more than US$600 million (HK$46.8 billion) this month.

REUTERS