Most Asian markets reversed earlier losses Thursday as the US said it would renegotiate its free-trade deal with Canada and Mexico, soothing fears of a trade war after reports said President Donald Trump was considering leaving the pact.

Equities across the region started the day in the red following four days of gains and as traders assess the chances of Congress passing massive tax cuts unveiled Wednesday.

The White House said all three countries would revise the 22-year-old North American Free Trade Agreement (NAFTA) swiftly.

The news fuelled relief on trading floors as the tycoon has previously hit out at the agreement -- calling it a "disaster" that has killed American jobs -- as well as other deals the US has signed globally.

Jitters about a possible trade war were heightened this week when Washington slapped 20 percent tariffs on Canadian softwood lumber imports.

“It is my privilege to bring Nafta up to date through renegotiation,” Trump said in a White House statement. “I believe that the end result will make all three countries stronger and better.”

The Mexican peso and Canadian dollar bounced back from early selling after the NAFTA announcement.

- Massive tax cut plan -

On equity markets Tokyo ended the day 0.2 percent lower after a four-day rally, with dealers unmoved by the Bank of Japan's decision to lower its inflation target and stand pat on its monetary easing programme. Its head later warned of another "likely" delay to achieving its two percent target.

Airbag maker Takata plunged 20 percent after a report said it was considering filing for bankruptcy protection and then rolling its key businesses into a new company.

But Hong Kong climbed 0.5 percent for a sixth-straight gain, while Sydney added 0.2 percent, and Singapore and Seoul each put on 0.1 percent.

Shanghai ended 0.4 percent higher and Wellington was up 0.3 percent.

In early European trade London fell 0.4 percent, while Frankfurt and Paris each slipped 0.3 percent.

The White House unveiled plans to slash corporate and individual rates Wednesday but there were few details and several questions over how the measures will be paid for.

The proposals are part of a wide-ranging plan to fire the world's top economy, which also includes ramping up infrastructure spending and wiping away business regulations.

"Under the Trump plan, we will have a massive tax cut for businesses and massive tax reform and simplification," US Treasury Secretary Steven Mnuchin said at the White House.

"Traders are viewing (the plan) as little more than a road map, rather than the much ballyhooed 'big announcement', because the statement did not provide any comprehensive details," said Stephen Innes, a senior trader at OANDA.

"While the essence of the proposal is reflationary... the argument remains for, and further clarity is required on how, the tax cut’s deficit ramifications will be offset. Fiscal reforms present a real revenue drain amidst disquieting concerns of the current trajectory for the US deficit."

Investors in New York were unsure about the measures and decided to cash out after two days of gains.

- Key figures at 0810 GMT -

Tokyo - Nikkei 225: DOWN 0.2 percent at 19,251.87 (close)

Hong Kong - Hang Seng: UP 0.5 percent at 24,698.48 (close)

Shanghai - Composite: UP 0.4 percent at 3,152.19 (close)

London - FTSE 100: DOWN 0.4 percent at 7,258.75

Euro/dollar: DOWN at $1.0902 from $1.0905 at 2100 GMT

Pound/dollar: UP at $1.2883 from $1.2849

Dollar/yen: UP at 111.28 yen from 111.00 yen

Oil - West Texas Intermediate: DOWN 24 cents at $49.38 per barrel

Oil - Brent North Sea: DOWN 18 cents at $51.64

New York - Dow: DOWN 0.1 percent at 20,975.09 (close)

 source: AFP