Equity markets in China hurled themselves back above the flatline late Wednesday, while other regional bourses mostly declined on the back of renewed fears over the stability of the world's second-biggest economy.
In the previous trading session, the Shanghai bourse closed down 6.1 percent in its biggest daily decline since July 27, as traders pared back their bets for more stimulus following the release of upbeat data that hinted at a bottoming out in the mainland's crucial property sector. Concerns over the yuan and liquidity in the economy also fueled jittery sentiment.
"Markets are still watching [the yuan] given the surprise last week. People are still waiting to see how deep the depreciation will go," William Ma, CIO of Gottex Fund Management, told CNBC Asia's "Squawk Box." The People's Bank of China (PBOC) set the midpoint rate at 6.3963 per dollar prior to the market open, a touch weaker than Tuesday's close of 6.3938.
Meanwhile, IG's market strategist Bernard Aw said: "Indicators of Chinese liquidity such as the offshore CNY one-year interest rate swap and one-week Shanghai interbank rate have been steadily rising, suggesting tighter credit conditions. As a corollary, the PBOC injected 120 billion yuan worth of seven-day reverse repo into the money market, the largest cash infusion in nearly 19 months. This signaled Beijing's mounting worries about capital outflows."
Major U.S. indices declined overnight, weighed down by earnings-related selling in Wal-Mart and a drop in commodity names due to concerns over the mainland economy. The tech-heavy Nasdaq led losses with a drop of 0.64 percent, while the and S&P 500 closed down 0.19 and 0.26 percent, respectively.
Mainland indices rebound
China's Shanghai Composite index cut losses to close up 1.2 percent in the final hour of trading. Earlier in the day, the Shanghai bourse dived more than 5 percent to touch its lowest level since August 6 before clawing back losses.
According to Reuters, a move by the PBOC helped offset fears that the government is considering scaling back its massive rescue effort for the country's stock markets which it put in place just last month.
Analysts who spoke to CNBC attributed the late-day upward jolt to bargain-hunting. "The morning's [steep selloff] is mechanical and not motivated by sentiment. [It was] purely motivated by the force-selling that dealers had to carry out following yesterday's rather baffling meltdown," Singapore-based analyst Nicholas Teo told CNBC by phone. "Once that selling is over, the downside eased and bargain hunters came in."
Most sectors, including banks and real estate, reversed losses and climbed at the end of the session.
Among the other indexes, the blue-chip CSI300 index and the smaller Shenzhen Composite rebounded 1.6 and 2.2 percent, respectively.
ASX rises 1.5%
Australia's index recouped all of Tuesday's sharp losses, helped by robust gains in the banking sector and a 1.8 percent rise in oil prices overnight.
Earnings season remains in full swing; Woodside Petroleum, the country's largest independent oil and gas producer, rallied 2.5 percent after delivering a 40 percent drop in first-half profit, slightly better than expected, as cost cuts partly offset the impact of falling oil prices.
Treasury Wine Estates soared 13.4 percent after swinging to a profit in the 12 months to June 30.
By contrast, SEEK slumped 11 percent to an 18-month low after the latest profit results of the online jobs and education portal disappointed investors.
Kospi loses 0.9%
South Korea's Kospi index trimmed losses after falling as much as 2.1 percent to hit an intra-day low of 1,915, as worries over its largest trading partner, China, took hold.
Central bank data which showed producer prices declining at their fastest pace since early 1999 likely weighed on sentiment as well. South Korea's producer price index (PPI) fell 4.0 percent from a year earlier in July, extending a falling streak that started in August last year and marking the sharpest decline since April 1999.
Among losers, cosmetics makers AmorePacific and LG Household & Healthcare sold off 4.4 and 1 percent, respectively. Chipmaker SK Hynix, which is in the news for announcing plans to invest $39 billion in new factories, retreated more than 5 percent.
Fortunately, hefty buy orders for blue chips managed to offset some losses. Samsung Electronics climbed 2 percent on the back of bargain hunting, while steelmaker Hyundai Motor and KB Financial Group elevated 1 and 0.3 percent, respectively.
In other news, the country's sovereign wealth fund Korea Investment Corp. has asked Elliott Management to refrain from investing in Korea-based businesses after the U.S. activist hedge fund firm lost a high-profile battle last month aimed at blocking a merger of businesses partly owned by the Samsung conglomerate. Shares of Korea Investment Corp. erased gains to close down 0.8 percent.
Nikkei tanks 1.6%
Japan's index widened losses to finish at a three-week low, brushing off data which showed larger-than-expected growth in exports.
Exports rose 7.6 percent in July from a year earlier, official data from the Ministry of Finance showed on Wednesday, beating expectations for a gain of 5.5 percent. Imports fell 3.2 percent year-on-year in July versus the median estimate for a 7.9 percent annual decrease, leading to a trade deficit of 268.1 billion yen ($2.16 billion).
Export-oriented and airline names were among the day's laggards; Suzuki Motor led losses in the auto space, down 1.9 percent, while Canon and construction equipment maker Komatsu receded more than 1 percent each. Japan Airlines and ANA Holdings dropped 2.7 and 2.1 percent, respectively, probably on the back of firmer jet fuel prices.
SoftBank also advanced 0.5 percent as investors cheered news that it is teaming up with China's Alibaba and Taiwan's Foxconn to invest $500 million in India's online retailer Snapdeal.
Southeast Asia eyed
Thailand's SET index inched up 0.5 percent, clawing back some losses after the benchmark index hit a near one-and-a-half-year low in the previous session as a deadly bombing in central Bangkok dented the outlook of the country's all-important tourism sector.
The tourism and leisure sub-index was little moved, while Thai Airways and Nok Air tacked on 1 percent each. Erawan Group —the operator of Bangkok's Grand Hyatt and the Marriott Courtyard hotels— traded flat.
The was last seen at 35.55 against the dollar, hovering near its weakest level in more than six years.
Meanwhile, Malaysian shares notched up 0.4 percent after data showed the country's inflation rate accelerating more than expected in July to 3.3 percent from a year earlier.