Asia Mixed as China Cash Crunch Worries Linger

Asian stocks were mixed in volatile trade on Wednesday as investors in Tokyo and Shanghai continued to worry about strained liquidity conditions in the mainland, despite reassurance from China's central bank.

Japan's Nikkei fell1 percent while the Shanghai Composite closed down 0.4 percent after tumbling as much as 2 percent earlier in the session. Amid gainers, South Korea's Kospi moved off the previous day's eleven-month low and Australian equities were the session's out performer, rallying 1.5 percent.

Upbeat U.S. home and durable goods orders data overnight also helped bolster sentiment, reassuring nervous investors about the Federal Reserve's plans to roll back its economic stimulus program.

ASX 200
CNBC 100

The People's Bank of China (PBOC) released a statement late on Tuesday, saying that it would provide cash to institutions that needed it. But analysts said that the move was not enough to quell market fears and that there was still plenty of uncertainty in the banking system.

(Read More: The Biggest Risk for Asian Markets - It's Not China)

"Analysts feel this PBOC intervention will only be supportive in the short term as the bigger picture is about banks de-leveraging and creating a more sound banking system," wrote Stan Shamu, market strategist at IG in a note.

Shanghai Down 0.4%

China's benchmark index moved off Tuesday's four-and-a-half year low but still traded well-below it's 200-day simple moving average of 2,186 points. The index remains in bear market territory, down 20 percent from February's ten-month high.

(Read More: Will the Reprieve for China's Lenders Last?)

Banks continued to be sold-off. Mid-sized lender Minsheng Bank closed down 1.6 percent after racking up losses of over 4 percent while CITIC Bank eased over 1 percent.

Nikkei Below 13,000

Japan's benchmark stock index briefly jumped 1 percent but was knocked off the 13,000 level as the yen strengthened against the dollar to around 97.40. Still, the yen remains off from this week's high of 96.9 per dollar.

Exporter stocks gave up their gains, with automaker Mitusbishi Motors down 6 percent and metals manufacturer Nisshin Steel declining over 7 percent.

(Read More: Waiting on a Bond Market Auction for Cues)

A slew of shareholder meetings were in focus for investors. Softbank pared gains following an earlier 4 percent rise after shareholders of U.S. telco Sprint Nextel approved the Japanese firm's takeover offer.

Railway and property group Seibu closed down nearly 3 percent after shareholders rejected a bid by Cerberus Capital Management for more seats on the board.

Sydney Outperforms

Australia's benchmark S&P ASX 200 snapped a four-day losing steak, rising above the previous day's six-month low led by resources.

Oil and gas producer Linc Energy jumped over 11 percent, ignoring a slide in crude oil prices while mining services firm Transfield rose over 9 percent.

(Read More: Guess Who Was Buying Amid the June Sell-Off)

Rio Tinto increased over 3 percent on reports that it could be backtracking on plans to put part of its Mozambique coal unit up for sale. This comes after the Anglo-Aussie miner said in February that it was not going to sell the project.

Kospi Up 0.2%

Seoul's benchmark index surrendered early gains as foreign investors sold-off shares for a fourteenth straight session, but traded just 14 points away from setting a new eleven-month low.

Woori Finance, one of South Korea's biggest financial services firms by assets, rose over 5 percent on news that the government will start taking steps to privatize the firm from July.

Market heavyweight Samsung Electronics slumped nearly 3 percent after news surfaced that the tech giant is in talks with European regulators to settle charges that it abused its market position.

By's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC