Asian stocks endured volatile trading on Tuesday, particularly in China where the index lurched violently higher in the final minutes of trade following the approval of railway projects worth nearly 70 billion yuan ($11 billion) by the country's top economic planner.
Meanwhile, other regional bourses put up a mixed performance due to global growth woes, with Japan's Nikkei 225 index losing year-to-date gains, as China's August trade data paint a grim picture of the economic health of the world's second-biggest economy.
The mainland's dollar-denominated exports declined by 5.5 percent year-on-year in August, while imports slid 13.8 percent, producing a trade surplus of $60.24 billion.
Stoking concerns further, Japan's revised gross domestic product (GDP) for the second quarter shrank an annualized 1.2 percent. While the data came in better than the initial estimate of a 1.6 percent contraction, some analysts remain unimpressed.
"It doesn't change the fact that Japan's economy shrunk despite no hurricane or big economic issues. Japan's economy is still very fragile," Takubi Okubo, principal and chief economist at Japan Macro Advisors, told CNBC.
Wall Street was closed Monday for the Labor Day holiday, but index futures moved higher, suggesting a rise in the U.S. equity markets when trading resumes on Tuesday.
Wild ride continues in China
A surge in late-day buying, driven partly by news that the National Development and Reform Commission (NDRC) had approved two new infrastructure projects, lifted the benchmark Shanghai Composite up 2.93 percent to close at 3,170.5 on Tuesday.
Banking heavyweights rebounded in afternoon trade, fueling speculation that government-backed investors intervened, said Reuters. Bank of China and China Construction Bank gained 0.8 and 1.5 percent, respectively.
Mirroring the reversal in the benchmark index, the blue-chip CSI300 Index and the smaller Shenzhen Composite closed up 2.6 and 3.8 percent, respectively.
Late Monday, the country's stock exchanges proposed plans for a "circuit breaker" system, aimed at restoring market stability. Authorities also said it would remove personal income tax on dividends for shareholders who hold stocks for more than a year, in a move aimed at encouraging longer-term investment in equities as opposed to short-term speculation.
The announcements followed a pledge by the China Securities Regulatory Commission (CSRC) on Sunday to take more steps to ensure stable markets, and other measures such as restricting trading in index futures and options.
However, some analysts remain bearish on the market's outlook.
"Sentiment is terrible and our baseline scenario is [for] the index to decline to 2,000, which was support during the 2010-2014 bear market," Tim Condon, head of research for Asia at ING Financial Markets, wrote in a note released Tuesday.
Hong Kong's Hang Seng index followed its mainland peers higher in late-day trade, surging over 3 percent. Among gainers, Glencore bounced up more than 3 percent, following a 7 percent rise in its London-listed stock overnight. The gains come after the mining and commodities trading giant announced a restructure plan to turn around the business in face of slumping commodity prices.
Nikkei loses 2.4%
The Nikkei index at the Tokyo Stock Exchange widened losses by late-day trading to finish below 17,450.77, erasing all gains made this year, as China-related concerns ignited 'risk-off' sentiment.
Exporters were mainly on the back foot as the yen gained ground against the U.S. dollar. Sony sagged 3.2 percent, while other blue chips such as Canon and Toyota Motor notched down 2 and 0.6 percent, respectively.
Despite the fall in share prices on Tuesday, Robert Rostan, CFO and principal at Training the Street (TTS), is optimistic that Toshiba is on the way to recovery following a probe into an accounting scandal. "Yesterday's [near] 2 percent increase in the stock price showed that the damage is done and [the] damage to credibility is behind them. They are now on the long road to repair," Rostan told CNBC's "The Rundown."
In other news, Japanese Prime Minister Shinzo Abe has won a rare second term as the head of the ruling Liberal Democratic Party, and thus premier.
ASX rises 1.7%
Australia's index outperformed regional bourses on Tuesday, helped by stellar gains in the energy and banking stocks.
Oil-related counters were the day's top performers, with sentiment lifted by Woodside Petroleum's $8 billion takeover approach for Oil Search. Shares of the latter rallied 17.3 percent, while the former declined 3 percent.
Santos, which said it was open to M&A activity last month, jumped 5.3 percent.
Kospi dips 0.2%
South Korea's Kospi index erased early gains to end lower for the third straight session, while the recovered from a five-year low. Earlier in the session, the currency slipped as much as 0.4 percent to 1,208.8 on the back of expectations that dollar demand will rise following Tesco's sale of its largest overseas unit, Homeplus.
Among decliners, blue chip Kepco closed down 2.1 percent, while pharmaceutical names such as Hanmi Pharm Co. tumbled 14.5 percent. The sub-index for pharmaceutical shares underperformed the broad market, down 5.7 percent.
Emerging Asia eyed
Taiwan's weighted index finished modestly higher amid lingering concerns about the domestic economy. Government data released Tuesday showed the country's consumer price index (CPI) fell for the eighth straight month in August, while exports tumbled at its sharpest pace in two and a half years last month.
The fall in the Malaysian ringgit also showed no signs of abating; the currency sagged 0.2 percent of its value against the greenback early Tuesday, hovering near 17- year lows.
According to economists polled by Moody's, the ringgit will likely stabilize in the coming 12 months as Brent crude prices average within a range of $45-55 per barrel in the coming year.