SYDNEY, NSW, Australia - Shares in Asia came under pressure on Thursday, although the Australian market gained.

U.S. inflation fears were stoked overnight by the release of a report showing the U.S. consumer price index jumping 7 percent in the 12 months to December, the largest annual increase in nearly four decades.

"If you are a global investor and you've seen very significant stock market gains in the U.S. during 2021, if you are seeing inflation as a threat then a lot of investors may be tempted to reallocate funds away from developed equity markets in the West into the mix of developed and developing markets in East Asia," Jim McCafferty, Nomura's joint head of APAC equity research told Reuters Thursday.

The Nikkei 225 in Tokyo shed 276.53 points or 0.96 percent to 29,489.33.

China's Shanghai Composite fell 42.17 points or 1.17 percent to 3,555.26.

In Hong Kong, the Hang Seng reversed earlier losses to close 27.60 points or 0.11 percent higher at 24,429.77.

The Australian All Ordinaries, going against the trend, advanced 35.30 points or 0.45 percent to 7,797.50. This despite Australia's most populated state, New South Wales, recording a record 92,264 Covid-19 cases in the prior 24 hours.

The U.S. dollar continued under pressure during the Asian trading zone, following major falls in the United States overnight. The euro was steady around 114.41. The British pound was clinging to its overnight gains, trading at1.3711. The Japanese yen was in demand at 114.61. The Swiss franc was well bid at 0.9143.

The Canadian dollar edged up to 1.2502. The Australian and New Zealand dollars were being bought up at 0.7284 and 0.6855 respecively.

Overnight on Wall Street, the Dow Jones industrials rose 38.30 points or 0.11 percent, to close Wednesday at 36,290.32.

The Nasdaq Composite climbed 34.94 points or 0.23 percent to 15,188.39.

The Standard and Poor's 500 added 13.28 points or 0.28 percent to 4,726.30.