Asian stocks fell on concern the Ukraine situation may escalate after President Barack Obama said the international order is being tested by Russian aggression.

The MSCI Asia Pacific Index dropped 0.5 percent to 134.93 as of 10:43 a.m. in Tokyo after rising 1 percent yesterday. Nine of the 10 industry groups on the gauge fell. Japan’s Topix index slid 1.5 percent as the yen extended yesterday’s gain against the dollar and most stocks traded without the right to the latest dividend.

Tencent Holdings Ltd. fell 5.6 percent in Hong Kong after Asia’s biggest Internet company agreed to pay about $500 million for a 28 percent stake in South Korea’s CJ Games. Itochu Corp., a trading firm, fell 3.6 percent in Tokyo after its rating was cut at Macquarie Group Ltd. Citic Pacific Ltd. surged 23 percent in Hong Kong as it plans to buy assets from parent Citic Group Corp., according to people with knowledge of the matter.

“There’s definitely the chance that things will escalate on the fact that the U.S. has been speaking increasingly strongly about actions,” said :S:d1&partialfields=-wnnis:NOAVSYND&lr=-lang_ja"> Angus Gluskie , managing director at White Funds Management in Sydney who oversees about $550 million. “It’s likely that the market will get nervous.”

South Korea’s Kospi index added 0.1 percent. Australia’s S&P/ASX 200 Index dropped 0.8 percent, while New Zealand’s NZX 50 Index lost 0.2 percent.

Hong Kong’s Hang Seng Index fell less than 0.1 percent, while the Hang Seng China Enterprises Index of mainland shares traded in the city rose 0.1 percent. The Shanghai Composite Index slid 0.3 percent. Taiwan’s Taiex index and Singapore’s Straits Times Index both climbed 0.2 percent.

Crimea Crisis

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The measure lost 0.7 percent yesterday with declines accelerating in the final hour of trading.

Obama, speaking in Brussels, warned of consequences of complacency in Ukraine and said Russia’s actions must be met with condemnation. Ukraine and the International Monetary Fund are nearing the end of bailout talks today as the U.S. and its European allies warned they’ll further penalize Russia if it intensifies the crisis after annexing Crimea.

Citigroup Inc. dropped in extended U.S. trading after the Federal Reserve said the bank’s capital plan failed its stress tests. Citigroup was among five banks to fail. Bank of America Corp. raised its quarterly payout after the Fed’s statement showed it passed after modifying its plans.

Data showed American factories received fewer orders for machinery, communications equipment and computers in February, signaling business investment is slowing after an unusually harsh winter damped sales.

The Asia-Pacific gauge traded at 12.8 times estimated earnings as of yesterday, compared with 15.8 for the S&P 500 and 14.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey