The Shanghai Composite halted a two-day sell-off on Tuesday on rumors that the central bank will hold a press conference with financial regulators to address liquidity conditions.
The index closed down 0.2 percent after plunging as much as 5 percent earlier in the session. Still, the index ended in bear market territory, having lost 20 percent from a ten-month high hit in February.
After the market close, the People's Bank of China (PBOC) attempted to ease concerns of a cash squeeze by saying that the seasonal factors leading to tight liquidity would fade. Officials also added that the central bank would guide interbank rates.
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The rest of Asian stocks fell in choppy trade. Japan's benchmark Nikkei index pared losses after skidding 2 percent, Australian equities hit a six-month low and South Korea's Kospi fell to an eleven-month low.