Mainland stocks volatile
China's key Shanghai Composite index swung up in late-day trading to close up 1.5 percent, recouping some of Wednesday's 3.5 percent slump which took the index down to a near one-week low.
The CSI300 Index of the largest listed companies in Shanghai and Shenzhen also rose 1.5 percent, after shrugging off a weaker start.
On the other hand, investors rushed into small caps following the previous day's sharp sell-off. The Shenzhen Composite more than doubled gains to 3.7 percent while the start-up ChiNext board moved up 4.7 percent. The Nasdaq-style ChiNext index is one of the most volatile share benchmarks in China.
"It's uncertain what caused the selloff in Chinese markets yesterday. Was it rumors that the government was going to pull market support? Concerns about Sinosteel missing its interest payment? Or did we just see some profit taking after a 20 percent rise in the Shanghai Composite? I would lean towards a combination of the latter two," IG's market strategist Angus Nicholson wrote in a note.
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Hong Kong markets reopen for trade after being shut for the Chung Yeung Festival in the previous trading session. The benchmark Hang Seng index halved losses to end down 0.6 percent.
Shares of Air China and China Southern Airline were among the day's top gainers, up by the daily maximum allowable of 10 percent each in Shanghai, following a report by the Shanghai Securities News that both carriers are considering a merger. The Hong Kong-listed stocks of both airlines soared 7.9 and 8.5 percent respectively.
Meanwhile, shares of Hong Kong-listed Real Nutriceutical Group tanked 8.3 percent after U.S.-based Glaucus Research Group California released a report on Thursday which said the company's "sales and net income are substantially less than reported to investors and regulators in the Company's Hong Kong filings."
Glaucus has a strong sell rating on the stock.
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Nikkei drops 0.6%
The rally in Japan lost steam, with the benchmark Nikkei 225 stepping back from Wednesday's six-week highs.
Expectations for further stimulus from the Bank of Japan (BOJ) had taken the Tokyo bourse on an upward ride in the recent sessions.
Among decliners, Fast Retailing tanked 1.4 percent, while other retailers Aeon and Seven & i Holdings dropped 1.2 and 0.6 percent respectively.
Stocks with exposure to China were mixed; steel producer JFE Holdings surged 3 percent but Japan Steelworks slipped 0.4 percent. Construction equipment makers Komatsu and Hitachi Construction Machinery sagged 0.3 and 0.8 percent respectively.
Nidec shares fell 1.3 percent, reversing from an earlier rally after the components maker said it was increasing capital spending to meet stronger demand for touch technology used in Apple's iPhones.
Bucking the weakness, Hitachi High-Technologies bounced up over 5 percent after its customer Intel said it is looking to invest $5.5 billion in making semiconductors in China.