Expectations the US will hike interest rates and the EU will also tighten monetary policy dragged most Asian and European markets lower Wednesday, but Tokyo chalked up a third-straight gain as a weaker yen helped exporters.

The dollar pushed on with this week's rally against global currencies, including hitting another three-decade high against the beleaguered pound.

Investors were given a weak lead by their US counterparts after comments from two top Federal Reserve officials fanned speculation it will lift borrowing costs before the end of the year.

Talk of an increase returned after data last week showed US factory activity rebounded in September, while trading floors gear up ahead of a crucial jobs report Friday.

On Tuesday Cleveland Fed president Loretta Mester said she saw a strong case for a rate hike in November. They were followed by Richmond Fed head Jeffrey Lacker, who said a rise was needed to avert a surge in inflation that could lead to sharp rate hikes later.

"A December rate hike seems almost certain, and it sounds like that may be followed by two more rate hikes next year instead of one," Chihiro Ohta, a Tokyo-based senior strategist at SMBC Nikko Securities, told Bloomberg News.

Bloomberg also cited unnamed European Central Bank officials on Tuesday as saying there was an "informal consensus" that it should gradually scale back its bond-buying programme in steps of 10 billion euros.

The news from Europe and the US comes as analysts warn the years of cheap cash are likely coming to an end, with the US economy picking up.

- Dollar rallies -

Talk of higher US rates has boosted the dollar this week and on Wednesday it toyed with 103 yen in the morning before dipping back to 102.90 yen, slightly up from its level in New York.

The greenback also stormed higher against higher-yielding Asia-Pacific currencies, including the Australian dollar, South Korean won, Indonesian rupiah and Malaysian ringgit.

Japan's exporters were lifted by the weaker yen, sending the Nikkei stock index to end up 0.5 percent, extending a rally to three-straight days.

Hong Kong posted a third gain, adding 0.4 percent, with the Hang Seng buoyed by recent upbeat China data and the impending opening of a link-up with the Shenzhen stock exchange that could see fresh funds flood in.

But most other Asian markets struggled. Sydney fell 0.6 percent, Seoul lost 0.1 percent, Manila tumbled 1.2 percent and Wellington was off 1.1 percent. Singapore was flat.

In early European trade London dipped 0.1 percent, Frankfurt slid 0.8 percent and Paris shed 0.9 percent.

"We've been at an inflection point in financial markets for a few weeks now, with market participants sensing a changing tide among central banks," Chris Weston, chief markets strategist at IG Ltd. in Melbourne, said in an e-mail to clients.

The pound tumbled briefly to a fresh 31-year low below $1.27 after British Prime Minister Theresa May set out a timetable for leaving the European Union by 2019. It was also at three-year lows against the euro, with talk of tighter ECB policy adding to the pound's woes.

The stronger dollar also sent gold tumbling almost $39 Wednesday to $1,270, its lowest levels since mid-June, before Britain's shock vote to leave the EU sent dealers rushing for safe haven investments.

- Key figures around 0800 GMT -

Tokyo - Nikkei 225: UP 0.5 percent at 16,819.24 (close)

Hong Kong - Hang Seng: UP 0.4 percent at 23,788.31 (close)

Shanghai - Composite: Closed for holiday

London - FTSE 100: DOWN 0.1 percent at 7,070.55

Pound/dollar: DOWN at $1.2713 from $1.2724 on Tuesday

Euro/pound: UP at 88.23 pence from 88.05 pence

Euro/dollar: UP at $1.1218 from $1.1203

Dollar/yen: DOWN at 102.91 yen from 102.88 yen

Oil - Brent North Sea (December delivery): UP 55 cents at $51.42/barrel

Oil - West Texas Intermediate (November): UP 58 cents at $49.27/barrel

New York - DOW: DOWN 0.5 percent at 18,168.45 (close)  

Source: AFP