Asian stock markets mostly fell on Wednesday as investors exited riskier assets amid a tense military standoff between North and South Korea and grew more worried there may be no immediate end in sight to Europe's debt crisis.

Oil prices rose slightly to near $82 a barrel in Asia as a report showing an unexpected jump in crude inventories provided mixed signals on demand. In currencies, the dollar rose against the yen but was lower against the euro.

South Korea's financial markets opened sharply lower Wednesday the day after an artillery clash between North and South Korea sent tensions on their divided peninsula soaring.

The Kospi index fell 3.3 percent in the opening minutes, though quickly pared losses and was 0.4 percent lower in early afternoon trading at 1,921.29.

Japan's Nikkei 225 stock average fell 0.7 percent to 10,044.52, after briefly falling below the 10,000 mark earlier in the session.

The South Korean won, meanwhile, dropped 2.6 percent against the dollar in early trading, but also recovered to trade 1 percent lower.

Rommel Lee, an analyst at Shinhan Investment Corp. in Seoul, said that China's call for a peaceful solution to the tension on the Korean peninsula helped calm nerves among investors Wednesday.

Chinese Foreign Ministry spokesman Hong Lei on Tuesday called on both sides, without naming them, "to do more to contribute to peace and stability on the peninsula."

"China saying to North Korea, 'find a peaceful solution to this incident' caused a positive reaction in the market, and overall it limited the negative effect," said Lee.

As market jitters over the Korean peninsula eased, investors began to worry anew that the much ballyhooed bailout of Ireland's banking sector may not be enough to contain Europe's debt crisis.

Stock traders panicked and dumped European shares Tuesday, sending Portugal's benchmark stock index down 2.2 percent by the close. The euro slid below $1.34 for the first time in two months as investors sought the relatively safety of the dollar.

Spooked by the scale of Greece's bailout requirements in May and Ireland's banking failures, international investors are looking much closer at the public finances of eurozone countries and they don't like what they're seeing, particularly in Portugal.

"For a while now, investors were pretty complacent over the European credit woes. So I think investors have underestimated how long the Irish problem may drag out," said Sean Darby, chief Asia Strategist at Nomura Global Equity Research in Hong Kong.

Shares in Australia, Taiwan, and New Zealand were lower, while Hong Kong's Hang Seng index rose 0.7 percent to 23,054.61. Benchmarks in Singapore and Shanghai also rose.

The Korean incident had less of an effect on U.S. markets, but investors there still dumped shares heading into the Thanksgiving holiday. Sentiment was also hurt as the Federal Reserve lowered its growth forecast for next year.

In a report releasing minutes from its last meeting Nov. 3, the Fed predicted that the economy will grow only 2.4 percent to 2.5 percent this year.

That's down sharply from a previous projection of 3 percent to 3.5 percent. Next year, the economy will expand by 3 percent to 3.6 percent, the Fed said, also much lower than its June forecast.

Wednesday will bring an unusually large amount of economic data since several reports that normally come out Thursday are being moved up because of the holiday.

Reports are due out on weekly claims for unemployment benefits, durable goods and personal income.

Overnight on Wall Street, the Dow Jones industrial average fell 1.3 percent to 11,036.37, while the broader Standard & Poor's 500 lost 1.4 percent to 1,180.73.

Benchmark oil for January delivery was up 37 cents to $81.62 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 49 cents to settle at $81.25 on Tuesday.

In currencies, the dollar rose slightly to 83.24 yen from 83.16 late Tuesday in New York. The euro rose to $1.3397 from $1.3363.