Many China shares held onto the previous day's solid gains. Construction stocks remained popular after China launched a new economic zone, offsetting any negative impact from a survey finding eased activity in China's service sector in March.

In Hong Kong, whose market is more exposed to global volatility, the benchmark Hang Seng index dropped 0.6 percent at midday, to 24,255.26 points, while the Hong Kong China Enterprises Index lost 1.0 percent, to 10,265.58 points.

Analysts say risk appetites shrank on news that most Fed policymakers think the central bank should take steps to begin trimming its king-sized balance sheet later this year as long as U.S. economic data holds up.

Investors were looking into President Donald Trump's first face-to-face meeting with China President Xi Jinping, with trade and security issues set to figure prominently.

"As long as they don't have huge conflict, the meeting won't have much impact," said Alex Wong, Hong Kong-based director of Ample Finance Group.

Wong also brushed aside the latest economic indicators about China. Activity in the service sector expanded at its weakest pace in six months in March, hurt by slower growth in new orders and intensifying cost pressures, a private survey showed.

"Investors are generally optimistic towards mainland's consumption and real estate sector," he said, adding that the Hong Kong and China markets were expected to outperform global peers.

A flurry of data in coming weeks is expected to show solid economic growth in China in March.

Nearly all sectors in Hong Kong retreated by the lunch break.

Shares of index heavyweight China Unicom rose more than 3 percent, hitting their highest level in nearly 18 months after the telecom operator released new restructuring plans. But then they tumbled, and were down 2.2 percent at midday.

In China, the blue-chip CSI300 index was roughly flat at 3,502.10 points, while the Shanghai Composite Index gained 0.1 percent, to 3,273.76 points.

Sector performance in the mainland markets was mixed.

An index tracking infrastructure plays was up 2 percent at midday.

(Reporting by Jackie Cai and John Ruwitch; Editing by Richard Borsuk)