HONG KONG (AFP) - Asian markets were mostly lower on Wednesday following a sell-off in New York and Europe, with fears about Greece returning to haunt dealers, while oil prices resumed their downward spiral after a slight uptick.

Shanghai's benchmark index recovered slightly after slumping more than five per cent on Tuesday - its heaviest loss in five years - although another round of weak inflation data capped gains.

Tokyo fell 1.38 per cent, taking another hit from further strengthening of the yen, while Shanghai edged up 0.24 per cent.

Sydney shed 0.68 per cent, Seoul eased 0.67 per cent and Hong Kong was flat.

Tuesday's losses in Asia, which followed a week-long rally, spread to European and US markets and were exacerbated by news that Greece had brought forward a presidential election, raising worries of fresh political instability.

Members of parliament agreed to hold a poll to replace President Karolos Papoulias on December 17 instead of February, when it was due.

The election is a key test for Prime Minister Antonis Samaras, who will be forced to call snap general elections if his candidate fails to garner enough support.

Samaras said he brought it forward to clear "clouds of political instability in Greece and political uncertainty over Greece abroad".

Analysts warned the uncertainty could stall Greece's fiscal reforms that are required as part of its bailout deal with the European Union and International Monetary Fund.

Greek stocks plunged 12.8 per cent - the largest one-day drop in 27 years - as investors feared a return to the dark days of the eurozone debt crisis that saw Athens almost leave the currency bloc.

The unease spooked dealers across the Atlantic, although initial sharp losses were pared by the end of trade.

The Dow fell 0.29 per cent and the S&P 500 dipped 0.02 per cent but the Nasdaq added 0.54 per cent.

In Shanghai the benchmark composite index, which had surged about 20 percent since last month - moved in and out of positive territory after slumping Tuesday 5.43 per cent on profit-taking.

The market had risen more than one per cent in early exchanges but retreated after official data showed inflation had fallen to a five-year low of 1.4 per cent in November, fanning fears of deflation in the world's number two economy.

The rise in the consumer price index released by the National Bureau of Statistics was the lowest since 0.6 per cent in November 2009, and represented a slowdown from October's 1.6 per cent.

On currency markets the dollar was at 119.44 yen early Wednesday, down from 119.63 yen in New York Tuesday afternoon and 120.18 yen in Tokyo earlier on Tuesday.

The yen has recovered over the past two days as dealers shift into safer assets during times of uncertainty.

The euro fell to 147.90 yen from 148.01 yen while fetching $1.2386 against $1.2378.

Oil prices - which have been hammered by a global supply glut - fell on expectations for a build-up in US crude stockpiles, indicating slack demand in the world's top oil consumer during the winter season.

US benchmark West Texas Intermediate for January delivery fell 85 cents to $62.97 while Brent crude for January eased 89 cents to $65.95.

The black gold rose slightly in New York after the US Department of Energy reduced its 2015 US production forecast marginally.

Gold was at $1,227.29 an ounce compared with $1,204.67 late Tuesday.