SYDNEY, Jan 5 - Asian share markets struggled to stabilise on Tuesday as Chinese stocks bounced from a shaky start, offering hope that Monday's plunge was a flash in the pan.
The People's Bank of China injected a generous slug of liquidity into domestic markets to keep borrowing costs down.
The central bank also set the value of its yuan currency a little firmer than many had expected, countering concerns China was seeking an aggressive devaluation to aid exports.
After an opening skid, the CSI300 index of the largest listed companies in Shanghai and Shenzhen rebounded to be 0.7 percent higher. That followed a 7 percent dive on Monday and only added to the market's reputation for wild moves.
Shares in Shanghai veered either side of flat and were last up 0.2 percent.
"The price action reminds investors that the world is more connected than ever; volatility is likely here to stay, and liquidity may suffer if investor uncertainty worsens," analysts at Citi said in a note.
"Global growth and geopolitical stability remain the main sources of concern."
Investors across the rest of Asia hoped for the best and nudged Japan's Nikkei up 0.4 percent, recouping just a little of Monday's 3.1 percent dive.
MSCI's broadest index of Asia-Pacific shares outside Japan swung higher to be up 0.3 percent, but Australia's market was still down by 0.9 percent.
EMINI futures for the S&P 500 also hinted at a bounce with a rise of 0.25 percent.
The Dow ended Monday down 1.58 percent, while the S&P 500 fell 1.53 percent and the Nasdaq dropped 2.08 percent as weak Chinese and U.S. factory activity surveys rekindled fears of a global economic slowdown.
Policymakers seemed to share the general sense of unease.
A South Korean finance ministry official on Tuesday said the government will take action to stabilise markets if needed.
Sweden on Monday gave its central bank chief formal powers to act immediately to weaken the crown and help push up inflation, a radical step among developed world institutions.
Under Governor Stefan Ingves, Sweden's Riksbank has already slashed rates to a record low of -0.35 percent.
The European Central Bank was under pressure to do yet more after German inflation proved surprisingly weak in December, pushing down bond yields and slugging the euro.
The common currency was stuck at $1.0825 on Tuesday, having touched a one-month low around $1.0780. Against a basket of major currencies, the dollar was flat at 98.872.
The dollar regained some ground on the yen to stand at 119.49, after being as low as 118.68 on Monday.
Oil prices edged up on Tuesday after a volatile session the previous day, with the impact of tension in the Middle East offset by worries over global economic growth.
Brent for February delivery was quoted 29 cents firmer at $37.51 a barrel, while U.S. crude added 27 cents to $37.03.