Asian stocks seesawed in volatile trade Tuesday with financial counters and exporters taking a roller-coaster ride. Japan closed slightly lower though the market was well over 1 percent lower at one point. South Korea finished the session up 1.2 percent.
Investors were worried that a slowing U.S. economy, combined with accelerating price rises could lead to stagflation, which refers to when prices rise and growth stagnates, would curb spending and drag out the credit crisis. Stagflation was last seen in the 1970s following a massive spike in oil prices.
The Nikkei 225 Average fell for a fifth day, with exporters such as Canon sold on growing uncertainty about the U.S. economy. In a volatile session with light turnover, bank shares including Mitsubishi UFJ Financial Group swung back and forth before ending higher.
South Korea's KOSPI rose for the first time in four sessions to end up 1.2 percent, as investors played down worries that U.S. inflation is rising while the world's top economy is slipping.
Australia's S&P/ASX200 Index finished 0.4 percent lower, recovering off earlier four-month lows as steep recent falls encouraged some investors to return to blue-chip banks and battered property stocks. But Centro Properties Group closed 40 percent down, a day after losing three-quarters of their value after it said it's having trouble refinancing A$1.3 billion ($1.1 billion) in debt.
Hong Kong stocks rose in choppy trade after falling for four straight sessions, with investors seeking a safe haven in utility stocks. HSBC Holdings bounced back, while new issue Pacific Online, a mainland Chinese Internet content provider, ended the morning lower than its offering price. Blue chips fell nearly 2 percent in early trade, but reversed direction in the afternoon and ended with a 0.5% gain.
Singapore's Straits Times Index alsoreversed losses to end 0.5%. Chinese shares were mixed as banking and property stocks recovered partially from Monday's selloff, but index heavyweights PetroChina and Sinopec were down.
Concerns about the U.S. economy will continue to haunt most Asian markets in coming days with investors likely to take cues from data on U.S. housing starts and permits and a U.S. Federal Reserve governors meeting on the mortgage situation later Tuesday