Asian stocks fell, paring yesterday?s biggest rally in a month for the regional benchmark index, as data showed a slowdown in U.S. manufacturing and investors weighed the prospect of a recession in Russia.

The MSCI Asia Pacific Index dropped 0.4 percent to 133.86 as of 9:40 a.m. in Tokyo after rising 1.2 percent yesterday, the steepest gain since Feb. 21. Nine of the 10 industry groups on the gauge fell. Banks warned Russia?s economy is at risk of shrinking as the world?s leading industrial powers threaten further sanctions to deter it from invading other parts of Ukraine after the annexation of Crimea.

The U.S. manufacturing report ?is a little bit weaker, but nothing changed much,? said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd. that manages about $1.6 billion. ?It?s a grinding recovery and some of the data are better than expected and some are worse.?

Toyota Motor Corp., a Japanese carmaker that gets 28 percent of its revenue in North America, slid 1.4 percent. Sekisui House Ltd. dropped 3.2 percent as it found defects in a Tokyo residential complex being built by Taisei Corp.

Japan?s Topix (TPX) index fell 0.8 percent, while South Korea?s Kospi index slipped 0.4 percent. Australia?s S& P/ASX 200 Index fell 0.5 percent and New Zealand?s NZX 50 Index lost 0.1 percent. Markets in Hong Kong and China are yet to open.

Futures on the Standard & Poor?s 500 Index gained 0.1 percent today after the measure declined 0.5 percent yesterday.

Slowing Manufacturing

A Markit Economics Ltd. preliminary index of U.S. manufacturing fell to 55.5 in March from 57.1 a month earlier, the London-based group said yesterday. Economists had expected a reading of 56.5. A level above 50 indicates expansion and this month?s reading was the second-highest since January 2013.

China?s manufacturing industry weakened a fifth straight month, a preliminary China Purchasing Managers? Index from HSBC Holdings Plc and Markit Economics showed yesterday. Signs of faltering factory output in the world?s two biggest economies come as U.S. policy makers rein in stimulus and as Chinese lawmakers pledge to maintain growth while curbing shadow banking and credit expansion.

Sanctions imposed by the U.S. and the European Union are pushing Russia toward a recession as the intensity of their economic penalties increases after the annexation of Crimea earlier this month.

Economic Sanctions

Banks including state-run VTB Capital say the world?s ninth-biggest economy will shrink for at least two quarters as penalties for annexing Crimea rattle markets, curb investment and raise the cost of borrowing. Sanctions that have so far focused on individuals with visa bans and asset freezes may be expanded to target specific areas of the economy.

The Group of Seven major powers decided to hold a summit in Brussels in June instead of a planned G-8 meeting in Sochi in the latest sanction against Russia. U.S. President Barack Obama and his fellow G-7 leaders met in The Hague to agree on the next steps in the crisis, amid growing concern that Russia is building up its forces on the border with Ukraine.

Futures on Hong Kong?s Hang Seng Index lost 0.5 percent in their most recent trading session, and contracts on the Hang Seng China Enterprises Index dropped 0.7 percent. The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. rose 0.6 percent yesterday.

The Asia-Pacific gauge traded at 12.6 times estimated earnings as of yesterday, compared with 15.8 for the S& P 500 and 14.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.