TOKYO: U.S. stock futures dipped and Asian shares were on the defensive on Thursday after a media report that U.S. President Donald Trump is being investigated by a special counsel for possible obstruction of justice.

Investors' appetite for riskier assets was also dampened by soft U.S. data and after the Federal Reserve raised interest rates as expected and gave its first clear outline on its plan to reduce its US$4.2-trillion bond portfolio.

Weak inflation readings, in particular, cast doubt on the Fed's view that the economy is continuing to strengthen.

S&P mini futures dipped 0.2 per cent in early Asian trade after the Washington Post reported that Trump is being investigated by special counsel Robert Mueller for possible obstruction of justice.

Mueller is investigating alleged Russian interference in the 2016 U.S. presidential election and possible collusion with the Trump campaign.

Trump's legal team denounced the report.

The news came just after the No. 3 Republican in the House of Representatives, Steve Scalise, was shot by a gunman angry with Trump and other Republicans.

Scalise was listed in critical condition.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.1 per cent while Japan's Nikkei fell 0.4 per cent.

Asian markets were also waiting to see if China's central bank would follow the Fed with another round of money market rate increases, as it did in March.

But traders were divided over the possibility, with some analysts noting the yuan is in better than a few months ago while liquidity in China has already been tightening.

The U.S. dollar bounced back from seven-month low against a basket of currencies after the Federal Reserve raised interest rates and gave a first clear outline on its plan to reduce its US$4.2-trillion portfolio of bonds.

Fed Chair Janet Yellen said the process could start "relatively soon", while projections of Federal Reserve Board members also showed they expect one more rate hike by the end of year.

Yet the Fed's decision was over-shadowed by surprisingly weak U.S. economic data released before the rate announcement.

Consumer prices unexpectedly fell on month in May and the annual increase in core CPI slipped to 1.7 per cent, the smallest rise since May 2015, after advancing 1.9 percent in April.

Retail sales fell 0.3 per cent last month -- the largest fall since January 2016 and way below economists' expectations for a 0.1 per cent gain -- amid declining purchases of motor vehicles and discretionary spending.

The data had knocked the dollar and U.S. bond yields to its lowest level in seven months against a basket of currencies.

The dollar index had fallen to as low as 96.323 on Wednesday, having shed nearly six percent on the year, before bouncing back a tad on the Fed's policy tightening.

The euro traded at $1.1210, after having hit a seven-month high of $1.1296.

The dollar fetched 109.35 yen, not far from Wednesday's eight-week low of 108.81 yen.

The 10-year U.S. Treasuries yield had slipped to as low as 2.103 percent and last stood at 2.129 percent.

"You cannot help the impression that there is a gap between the Fed's bullish inflation forecast and the weakness in actual data," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

"The Fed seems to think the weakness is temporary. But that view will be tested in coming months," he added.

Money market instruments such as Fed fund futures show market players see the likelihood of one more rate hike this year as less than 50 percent.

Crude oil prices were listless after having slumped nearly 4 per cent to their lowest close in seven months on Wednesday, on an unexpected large build in gasoline inventories.

Brent crude futures slipped another 0.4 per cent in early Asian trade to US$46.83 per barrel, near a five-month low of US$46.64 touched in early May.

Many other commodity prices are also under pressure. Thomson Reuters CRB index tumbled to 14-month lows, having fallen almost 12 per cent from this year's high hi

t in January. -- Reuters