Asian stocks were locked in a fresh round of volatility Wednesday, as further evidence of slowing growth in China's economy cast gloom over global markets.

After hefty early losses, some regional bourses reversed direction to close in positive territory, in the latest session of roller-coaster trade following a dismal day on US and European markets as concerns over the worldwide outlook were revived.

The Australian dollar -- heavily linked to demand for the country's abundant natural resources -- plumbed six-year lows with figures out of Canberra showing the economy logged a slower-than-expected 0.2 percent quarterly expansion.

That came after Canada officially entered recession, hit hard by stubbornly low oil prices.

Both countries' economies are dependent on the exports of commodities -- such as iron ore -- that have powered Chinese growth over the last decade.

Adding to tensions are uncertainties about the US Federal Reserve's plans for interest rates ahead of a policy meeting this month, with fears a tightening of monetary policy in the world's number-one economy will be another dampener.

"You have worries about the global growth outlook led by Chinese concerns at a time when the Fed is thinking about raising interest rates and that's leaving investors very twitchy," Shane Oliver, a global strategist at AMP Capital Investors Ltd. in Sydney, told Bloomberg News.

"I think we’ve seen the worst but it's an environment where volatility is likely to continue."

The Tokyo market saw some of the worst turbulence, opening sharply lower only to rally at mid-session and then lose those gains to close down 0.39 percent.

Shanghai's stocks plunged 4.39 percent at the beginning of the day before ending the morning 0.31 percent higher, with analysts saying the government likely provided support ahead of a two-day World War II remembrance holiday.

On Tuesday official data showed Chinese factory activity contracted in August, the latest sign that growth in China -- which accounts for more than 13 percent of global GDP -- is slowing.

While the Shanghai stock market is somewhat decoupled from the real economy -- many analysts and players acknowledge it is akin to gambling -- wild ructions there are seen as worrying indications of Beijing's ability to manage structural changes.

Commentators say China's high government-spending model of the last three decades is unsustainable, and needs to transition into consumer spending.

They point to the country's huge population as a vast, under-tapped source of demand that could offer opportunities for growth; but fears abound that Communist Party managers are struggling to shepherd the changes.

More demand

Washington, whose own recovery from the global financial crisis is still far-from entrenched, will this week urge China to better communicate its policies, when representatives from the elite Group of 20 meet in Turkey.

Treasury Secretary Jacob Lew "will emphasise that, fundamentally, the world needs more demand", said a US official, who spoke on condition of anonymity.

Wu Kan, a Shanghai-based fund manager at JK Life Insurance Co. said Beijing appeared to have been buying blue-chip stocks over recent days in an effort to support the market.

"But investors have lost confidence amid the ongoing de-leveraging and the overnight global rout," he said. "The correction isn't over yet."

The jitters in China were reflected across most of the region. Hong Kong was marginally higher by the break and Seoul was up 0.19 percent after starting in the red.

In Sydney, where several companies with close ties to China are listed, the main index spent most of the session in the red before a late rally pushed it just 0.1 percent higher.

Despite the ructions caused by the China crisis International Monetary Fund chief Christine Lagarde on Wednesday said Asian economies were doing "pretty well".

Speaking in Jakarta, she said the recent turmoil highlighted the "extraordinary gains" made by Asian economies but warned further volatility was on the horizon.

"Now the situation is changing yet again, and we are all feeling the impact of China's rebalancing and moving to a revised business model," she told a conference.

The Australian dollar, which was hovering around 70 US cents Wednesday afternoon, briefly slipped to 69.95 US cents, its lowest in six years. The Reserve Bank of Australia Tuesday kept interest rates at a record-low 2.0 percent to support growth.

Oil extended its sell-off to a second day. US benchmark West Texas Intermediate for October delivery fell 94 cents, or 2.1 percent, to $44.47 while Brent slipped 88 cents, or 1.8 percent, to $48.68.

On Tuesday WTI sank 7.7 percent and Brent lost 8.5 percent. Until then the contracts had enjoyed a three-day rally, adding more than 25 percent, on hopes for an easing of a worldwide supply glut.