MSCI's broadest index of Asia-Pacific shares outside Japan was 1 percent higher and on track for a more than 4 percent gain in June.

The tech stocks in the region rose over 2 percent to a record high as the rally raged on with AI darling Nvidia dethroning Microsoft to become the world's most valuable company on Tuesday.

Futures indicated that European bourses were set for a more subdued opening, with Eurostoxx 50 futures little changed and FTSE futures down 0.18 percent.

Investor focus will be on UK inflation data due later in the day that will set the stage for Bank of England (BoE) policy decision on Thursday, with the central bank widely expected to stand pat on rates.

The inflation report is expected to show Britain's inflation rate fell back to the BoE's 2 percent target in May, from 2.3 percent in April, while services CPI is expected to come in at an annual 5.5 percent in May, from April's 5.9 percent.

Kyle Chapman, FX markets analyst at Ballinger Group, said Wednesday's May inflation report will be the deciding factor and a cut could still be on the table if services inflation gets back on track.

"Unless it collapses, I think we will need a few pieces of evidence to convince the Bank of England that it is sustainably on the way down," he said.

Sterling, which is down nearly 0.3 percent so far this month, last fetched $1.2708, while the euro steadied at $1.0736 and is down 1 percent so far in June.

The single currency has been under pressure in the wake of French President Emmanuel Macron calling for a snap election following a trouncing of his ruling centrist party in the European Parliament elections.

US markets are closed on Wednesday, which will likely result in muted trading throughout the day.

US retail sales barely rose in May and figures for the prior month were revised considerably lower, data showed on Tuesday, suggesting economic activity remained lacklustre in the second quarter.

The data led to a small boost in rate cut expectations for September with traders pricing in a 67 percent chance of easing compared with a 61 percent chance a day earlier, CME tool showed. Markets are pricing in 48 basis points of cuts this year.

"[The] Fed will need more data to support its case for a rate cut and investors should not overact to one or two data points," said Vasu Menon, managing director of investment strategy at OCBC.

Last week, mild US inflation readings contrasted with an overall hawkish stance by Fed officials, who trimmed their previous median projection for three quarter-point rate cuts this year to one.

"Rate cuts are a stronger story for 2025 but that's fine because there is hope that it will happen in a bigger way over the next two years even if 2024 remains uncertain, and that will keep markets supported," Menon said.

Fed officials are looking for further confirmation that inflation is cooling and for any warning signs from a still-strong labor market as they steer cautiously toward what most expect to be a rate cut or two by the end of this year.

In Asia, the Japanese yen was little changed at 157.835 per dollar, hovering close to the six-week low of 158.255 it touched last week. The currency remains under pressure from the wide difference between interest rates in Japan and the United States.

Minutes of Bank of Japan's April policy meeting showed policymakers debated the impact a weak yen could have on prices, with some flagging the chance of raising interest rates sooner than expected if inflation overshoots.

In commodities, oil prices steadied, with Brent crude futures up 0.06 percent at $85.38 a barrel, while US West Texas Intermediate crude was little changed at $81.56 per barrel.