Stocks in Asia fell on Tuesday as investors worried China's latest rate cut was not enough to boost confidence in the weakening economy and awaited a wider stimulus package by Beijing. China, in a highly anticipated move, cut two key benchmark lending rates for the first time in 10 months on Tuesday, with its one-year loan prime rate (LPR) lowered by 10 basis points to 3.55 per cent and the five-year LPR cut by the same margin to 4.20 per cent.

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MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.69 per cent. China's benchmark CSI edged down 0.03 per cent. U.S. markets were closed on Monday. "I don't think they (the LPR cuts) are going to move the needle at all," said Redmond Wong, Greater China market strategist at Saxo Markets. He said a 15 basis-point cut would be a "stronger message" to boost China's property sector.

China's real estate index dropped 0.74 per cent in early trade. The rate cuts are the latest in a string of moves by Beijing to shore up a slowing recovery in the world's second-largest economy amid looming deflation risks, property market woes and high youth unemployment.

The People’s Bank of China lowered the medium-term lending facility rate on Thursday last week. The market was speculating on what China could do next to revive the recovery but was disappointed by a lack of concrete measures from a cabinet meeting on Friday. "We probably will need to wait for China's Politburo meeting, headed by President Xi early in July, for any concrete announcement on a new round of stimulus," National Australia Bank Senior FX Strategist Rodrigo Catril said in a client note.

The delay in further stimulus measures weighed on sentiment and followed moves by a handful of big banks, including Goldman Sachs, to lower their growth forecasts for the Chinese economy. Meanwhile, China and the United States failed to produce any major breakthrough during a rare visit to Beijing by U.S. Secretary of State Antony Blinken, but both sides agreed to stabilise relations to avoid veering into conflict.

"The meeting helped improve sentiment, but the market also understands that there's strategic competition between the U.S. and China," Saxo's Wong said. Hong Kong stocks dropping 1.58 per cent on Tuesday. Japan's Nikkei traded almost flat with a 0.05 per cent drop.

Australian shares bucked the trend to edge higher to a seven-week peak on Tuesday, with commodity stocks leading the charge, while traders awaited minutes of the central bank's June policy meeting for more insight into the path of interest rates.

The benchmark U.S. 10-year Treasury yield rose 3.3 basis points. U.S. crude fell 1.38 per cent to $70.79 per barrel and Brent was at $75.83, down 0.34 per cent on the day. The U.S. dollar index rose 0.088 per cent, with the euro down 0.1 per cent to $1.0911. Spot gold dropped 0.1 per cent to $1,948.39 an ounce.

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