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Hong Kong - Asian shares mostly slipped on Tuesday as China's economic woes keep investors on edge, while Japan's Nikkei retreated and the yen ticked higher after the country's central bank held off fresh measures to shore up its torpid economy.
While the China-fuelled volatility that has characterised much of the past month's trading has eased off, much of the morning's confidence waned as investors turn their attention to Thursday's crucial US interest rate decision.
Most of the emerging currencies that rallied in the morning were weaker in the afternoon. And the Australian dollar, given a boost by news the popular Malcolm Turnbull would replace Tony Abbott as prime minister, relinquished initial gains.
While the Bank of Japan was widely expected not to expand its giant stimulus Tuesday, there was a sense of disappointment after its announcement in which it said the economy "has continued to recover moderately".
However, it did indicate "exports and production are affected by the slowdown in emerging economies" and analysts said further monetary easing measures were still likely to come.
Marcel Thieliant of Capital Economics said in a client note: "The Bank of Japan's more cautious assessment of economic conditions suggests that policymakers will announce additional monetary stimulus before too long."
Despite more than two years of massive government spending and central bank monetary easing, Japan's leaders are struggling to kickstart growth in the world's number three economy with a hoped-for inflation surge also failing.
The tepid outlook comes against a backdrop of global turmoil in the wake of China's yuan devaluation last month.
Dealers will be watching to see what bank governor Haruhiko Kuroda has to say at a news conference later in the day about its plans for the future.
"If we see anything from Mr Kuroda and the BoJ today it will be setting the scene for additional measures if they so need," Chris Weston, chief market strategist in Melbourne at IG, said in an e-mail to clients.
On currency markets the yen rebounded against the dollar and euro. The greenback was at ¥119.95 in late trade, compared with ¥120.51 earlier. And the European single currency was at ¥135.75, well down from ¥136.22 in the morning.
Tokyo's Nikkei also pared gains, sitting 0.55% after rallying 1.33% in the morning.
Most other regional markets were lower as worries about the Chinese economy persist. Shanghai was 2.46% down, Hong Kong lost 0.19% and Sydney - where several firms with links to China are listed - shed 1.39%.
In China authorities said Monday they were cracking down on thousands of stock accounts linked to illegal trading, in its latest bid to restore order to markets pummelled by a rout that has wiped trillions off valuations in the country in three months.
Leaders have launch an unprecedented rescue package - including government-backed entities buying equities - since the Shanghai market began crashing. It has lost about 40% since hitting a June 12 peak.
Australia's dollar, which is closely linked to China's strength, sank back after surging against the greenback on news Turnbull had ousted Abbott in a party vote Monday.
The unit was 0.30% lower at 71.16 US cents in late exchanges, well off the 71.46c touched earlier.
Abbott won power in a general election two years ago but his first budget proved highly unpopular and had to fight off a leadership challenge in February after poor polling and a serious of gaffes ignited a backbench revolt.
Uncertainty over the Fed's plans for raising interest rates are keeping investors guessing. While a rate rise is expected by the year's end, the global ructions unleashed by China's devaluation last month has complicated bank policymakers' decision.
Caution returned to trading floors towards the end of the day, with the dollar reversing earlier weakness against the Malaysian ringgit, Indian rupee and South Korean won. It also clawed back most of its losses against the Singapore and Taiwan dollars.
