Hong Kong - Asian markets were mixed on Wednesday, with fresh fears about Greece and further losses in oil prices offset by a strong rebound in Shanghai, a day after suffering its worst loss in five years.
The yen made further inroads against the dollar as last week's positive sentiment gave way to caution.
Tokyo - taking another hit from the strengthening yen - sank 2.25%, or 400.80 points, to 17 412.58.
Sydney fell 0.45%, or 23.7 points, to 5 259.0 and Seoul slipped 1.29%, or 25.39 points to 1 945.56.
Political instability
Shanghai clawed back some of a more than 5% drop on Tuesday, surging 2.93%, or 83.74 points, to end at 2 940.01, while Hong Kong added 0.16%, or 38.69 points, to 23 524.52.
Heavy losses in Asia on Tuesday dragged down European and US markets, exacerbated by news that Greece had brought forward a presidential election, raising fears of fresh political instability.
Members of parliament agreed to hold a poll to replace President Karolos Papoulias on 17 December instead of February, when it was due.
The election is a key test for Prime Minister Antonis Samaras, who will be forced to call snap general elections if his candidate fails to garner enough support.
Leave the currency bloc
Samaras said he brought it forward to clear "clouds of political instability in Greece and political uncertainty over Greece abroad".
Analysts warned the uncertainty could stall fiscal reforms that are required as part of Greece's bailout deal with the European Union and International Monetary Fund.
Greek stocks plunged 12.8% - the largest one-day drop in 27 years - as investors feared a return to the dark days of the eurozone debt crisis, which saw Athens almost leave the currency bloc.
The euro fell to ¥147.48 in Tokyo Wednesday from ¥148.01 while fetching $1.2368 against $1.2378.
The unease spooked dealers on Wall Street, although initial sharp losses were pared by the end of trade on Tuesday. The Dow fell 0.29% while the S&P 500 was flat and the Nasdaq added 0.54%.
Increasing speculation
In Shanghai the benchmark composite index, which had surged about 20% since last month, helped by an interest rate cut, rallied towards the close on increasing speculation that Beijing will further ease monetary policy.
The market tumbled in the morning after data showed inflation had fallen to a five-year low of 1.4% in November, fanning fears of deflation.
The dollar was at ¥119.20 on Wednesday, down from ¥119.63 in New York on Tuesday afternoon and sharply lower than the levels above ¥121.00 at the start of the week, as dealers shifted into safer assets in the face of market uncertainty.
However, the dollar's uptrend still remains intact, said Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan.
Winter season
"It wouldn't be a surprise" if the dollar rebounds towards the technically important level of 121.30 yen within several days, he told Dow Jones Newswires.
Oil prices - which have been hammered by a global supply glut - fell on expectations of a build-up in US crude stockpiles, indicating slack demand in the world's top oil consumer during the winter season.
US benchmark West Texas Intermediate for January delivery slipped $1.19 to $62.63, while Brent crude was down $1.12 at $65.72 in afternoon trade.
Oil rose slightly in New York after the US Department of Energy reduced its 2015 US production forecast marginally.
Gold was at $1 227.00 an ounce compared with $1 204.67 late on Tuesday.
In other markets:
- Taipei fell 96.74 points to 9 032.16.
Taiwan Semiconductor Manufacturing Co slipped 1.45% to Tw$136.0 while Hon Hai Precision Industry was 0.44% lower at Tw$89.6.
- Wellington fell 19.36 points to 5 523.58.
Air New Zealand was down 1.04% at NZ$3.27 and Chorus slipped 0.93% to NZ$2.665.
- Manila ended 0.12% lower, slipping 8.79 points to 7 712.08.
Philippine Long Distance Telephone dipped 0.57% to 2 814 pesos while Universal Robina Corp. slid 1.04% to 190.70.
- Kuala Lumpur gained 27.42 points to close at 1 765.52.
- Budget carrier AirAsia lost 1.4% to 2.73 ringgit.
- Jakarta ended up 43.10 points at 5 165.41.
Carmaker Astra International rose 0.70% to 7 150 rupiah while retailer Ramayana Lestari Sentosa slipped 2.65% to 735 rupiah.
- Singapore closed 5.97 points at 3 325.81.
- Real estate developer CapitaLand gained 0.31% to Sg$3.29 while United Overseas Bank rose 1.19% to Sg$24.68.
- Bangkok was closed for a public holiday.
- Mumbai closed at 27 831.10, rising 34.09 points.
Reliance Industries was down 0.77% at 932.05 rupees and Hindustan Unilever was down 1.79% at 798.90 rupees.