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Asian markets were mixed on Tuesday, but while they were up from earlier lows, investors continued to fret over looming US-China tariffs that bring a potential trade war a step closer.
Wall Street provided a positive lead but the day began with another selling frenzy that saw Hong Kong plunge more than three percent at one point before bargain-buying provided a small bounce.
Still there are particular fears for Shanghai, which has plunged more than 20% from its January high as the colossal Chinese economy shows signs of slowing, even before Donald Trump's threatened tariffs kick in Friday.
The yuan extended losses and has fallen around eight percent since the end of March - it is now at an 11-month low - adding to fears about the mainland as leaders struggle to cap a debt mountain while also supporting growth.
Analysts dismissed some claims that authorities are allowing the Chinese currency to weaken in order to offset the impact of any tariffs.
"We have already seen the impact on Chinese investors' anxiety over a weaker currency and subsequent capital outflow in 2015 to 2016," said Tai Hui, JP Morgan Asset Management chief market strategist for Asia-Pacific.
"This is not a can of worms that Beijing wants to open again."
People's Bank of China Governor Yi Gang looked to provide some optimism, telling the China Securities Journal authorities were keeping an eye on the situation.
"We will continue to implement a prudent and neutral monetary policy... and keep the yuan exchange rate basically stable at a reasonable and balanced level," he said.
The US Commerce Department on Monday added to the standoff by recommending against the approval of China Mobile's seven-year-old application to enter the US market, citing national security concerns.
The call comes as US lawmakers debate reimposing a ban on US firms selling to Chinese telecoms equipment maker ZTE over security considerations, putting its survival in peril.
In share trading Hong Kong sank more than 3% at one point as traders returned from a long weekend break to play catch up with the rest of Asia's retreat on Monday.
The Hang Seng then edged back to end 1.4% lower. China Mobile's shares were down 2%.
Shanghai rose 0.4% and Singapore lost 0.2%, while Tokyo ended 0.1% lower.
Sydney added 0.5%, Seoul rose 0.1% and Wellington jumped more than 1%. Taipei and Jakarta fell but Manila and Bangkok rose.
In early European trade London rose 0.5%, Paris added 0.4% and Frankfurt gained 0.7%.
While the focus this week is mainly on the hundreds of billions worth of goods targeted by US-China tariffs, Trump has also taken aim at the European Union and Canada, which have both announced retaliatory measures, adding to global trade war warnings.
Oil prices edged up in Asia after taking a hit on Monday from a tweet by Trump at the weekend saying Saudi Arabia had agreed to his request to ramp up output.
Despite the possible increase in output, analysts said they saw prices continuing to rise.
"The market remains supported by a production outage in Libya and the overhang from recent US... data which suggest US supplies are running very tight," said Stephen Innes, head of Asia-Pacific trade at OANDA.
The euro held up against the dollar after German Chancellor Angela Merkel reached a compromise deal on immigration with her coalition partners, keeping her government intact for now and averting a crisis in Europe's biggest economy.
