Asia markets retraced much of their earlier losses to trade mostly higher on Tuesday, following the conclusion of the first U.S. presidential debate.
Some analysts attributed the turnaround in most Asian stocks to a market perception that Democratic nominee Hillary Clinton won the debate against Republican candidate Donald Trump, which was held late Monday U.S. time.
"Leading into the debate, traders were long volatility, anticipating a Trump victory and risk-off session," said Matt Simpson, senior market analyst at spreadbettor ThinkMarkets. "But as soon as traders caught a whiff of Donald's defeat, short bets were closed and risk sentiment improved."
CMC Markets' chief market strategist, Michael McCarthy, said the market was "searching for the least worse option between the two U.S. candidates."
"One is a known market bad, the other an unknown bad. Any ramping up of populist rhetoric would likely rattle investors. Any perception that the outsider candidate won the debate could bring a market rout," said McCarthy.
Australia's ASX 200 closed down 25.52 points, or 0.47 percent, at 5,405.90, after paring some of its 1 percent losses from early trade. The heavily-weighted financial sector closed down 0.79 percent, while the energy sector was lower by 0.75 percent.
Major banks in the country finished lower, with shares of ANZ down 0.54 percent, Commonwealth Bank of Australia was down 0.95 percent, Westpac was off 1.29 percent and National Australia Bank was lower by 0.21 percent.
In South Korea, the Kospi was up 15.73 points, or 0.77 percent, at 2,062.84, after reversing earlier losses of nearly 0.7 percent. In Hong Kong, the was up 1.15 percent in late afternoon trade.
Chinese mainland markets erased early losses, with the composite ending up 0.59 percent, or 17.45 points, at 2997.88, and the Shenzhen composite adding 0.75 percent, or 14.66 points, to 1981.26..
Japan's closed up 139.37 points, or 0.84 percent, to 16,683.93, erasing a nearly 1.3 percent loss in early trade. Stocks were under pressure earlier due to an overnight rise in the yen.
The Japanese yen also erased early strength. After the dollar/yen pair fell as low as 100.07, compared with around 100.85 on Monday afternoon local time, the pair recovered to 100.91 as of 2:19 p.m. HK/SIN.
Exporters in Japan mostly reversed losses to close higher, with Toyota up 1.64 percent, Nissan off 0.73 percent, Sony down 0.09 and Fujitsu up 0.09 percent.
The yen had climbed after Bank of Japan Governor Haruhiko Kuroda told business leaders in Osaka that the central bank was prepared to use every policy tool available to achieve its 2 percent inflation target, including cutting short-term interest rates further into negative territory.
"While underscoring his determination to use all possible policy means to achieve inflation goals, [Kuroda] did nothing to assuage deepening market conviction that the policy instruments and settings announced last week won't do it," Ray Attrill, global co-head of foreign exchange strategy at the National Australia Bank, said in a morning note.
In the broader currency market, the dollar index, which tracks the greenback against a basket of currencies, traded at 95.372, compared with its last close at 95.297, and down from levels above 96.00 in the previous week.
Oil prices retreated during Asian hours on Tuesday, after climbing in the Monday session, amid growing volatility in the energy market as the world's largest oil producers met at the sidelines of an energy conference in Algeria to discuss oversupply concerns.
U.S. crude futures traded down 0.17 percent at $45.85 a barrel as of 2:28 p.m. HK/SIN, after settling up 3.3 percent in the U.S. session. Global benchmark Brent was down 0.38 percent at $47.17 a barrel, after adding 3.2 percent overnight.
The fell 166.62 points, or 0.91 percent, to close at 18,094.83. The S&P 500 index dropped 18.59 points, or 0.86 percent, to 2,146.10, while the closed down 48.26 points, or 0.91 percent, at 5,257.49.