Fresh US-China tariff war volleys pressured Asian shares on Tuesday, but comments from US President Donald Trump that he expects trade negotiations to be successful aided sentiment.
Chinese markets that were pummelled in early trade trimmed losses amid signs of state support.
China on Monday announced it would impose higher tariffs on $60 billion of US goods following Washington's decision last week to hike its own levies on $200 billion in Chinese imports.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.9 percent as volatile Chinese markets paused for their midday break. The index had earlier fallen as much as 1.25 percent to its lowest since January 30.
Providing some support for Asian markets were comments from Trump late on Monday that trade talks with China are "going to be very successful". That helped lift US stock futures more than 0.5 percent, though sentiment remained fragile.
Prakash Sakpal, Asia economist at ING in Singapore, said Monday's volatility showed how a "180-degree" turn in US rhetoric on trade negotiations had spooked markets.
"We don't see any quick end to this state of the markets until we see some resolution, constructive dialogue and something very solid in terms of deals. But the hopes for that are a bit misplaced currently," he said.
Broader Asian markets were dragged lower by sagging Chinese shares, with the MSCI China index dropping 1.6 percent. China's blue-chip CSI300 index swung between losses and gains amid signs of possible state support, before finishing the morning session down 0.2 percent.
"Politicians may be willing to focus less on the market impact until things get more severe, making it doubtful there will be an early resolution to the current breakdown in negotiations simply based on market moves," said Kerry Craig, global market strategist at J.P. Morgan Asset Management.
"Furthermore, as there isn't a clear schedule for meetings between Chinese and US negotiators, markets are likely to be more volatile."
Australian shares lost 0.9 percent while Japan's Nikkei stock index slid 0.8 percent, touching its lowest since mid-February.
The US Trade Representative's office on Monday said it planned to hold a public hearing next month on the possibility of imposing duties of up to 25 percent on a further $300 billion worth of imports from China.
The tariff escalation has rattled global markets, even as Trump said he would meet with Chinese President Xi Jinping next month.
On Monday, the Dow Jones Industrial Average fell 2.38 percent to 25,324.99, the S&P 500 lost 2.41 percent to 2,811.87 and the Nasdaq Composite dropped 3.41 percent to 7,647.02.
As investors flocked to safe-haven assets, US Treasury yields remained near six-week lows early on Tuesday, though they moved higher following Trump's comments. Benchmark 10-year Treasury notes last yielded 2.4157 percent compared with a US close of 2.405 percent on Monday.
The two-year yield, which rises with traders' expectations of higher Fed fund rates, ticked up to 2.1945 percent from a US close of 2.193 percent. But data from CME Group continued to show a more than 70 percent chance of the Fed cutting rates by the end of 2019.
After an earlier inversion, US 10-year yields moved higher than those on three-month Treasury bills. A sustained inversion of this part of the yield curve has preceded every US recession in the past 50 years.
On Monday, some traders were concerned that China, the largest foreign US creditor, could dump Treasuries to counter the Trump administration's hardening trade stance. But most analysts downplayed such a possibility.
"If China did start to (sell Treasuries) it will galvanise both sides of politics in the US against China and the Fed would be sent into the market to buy bonds," Greg McKenna, strategist at McKenna Macro said in a note to clients.
"That would expand its balance sheet but it would allow it to neutralise China's efforts to disturb US financial markets. So I doubt they'll try to sell Treasuries."
After earlier falling against the yen, the dollar strengthened 0.25 percent against the Japanese currency to 109.57.
The single currency was up about 0.1 percent on the day at $1.1238, while the dollar index, which tracks the greenback against a basket of six major rivals, was nearly unchanged at 97.313.
China's offshore yuan hit a fresh 2019 low early in Asia on Tuesday before rebounding. It was last trading at 6.8933 per dollar, up 0.28 percent on the day.
Its onshore counterpart strengthened to 6.8733 per dollar after touching four-month lows on Monday, sparking speculation China's central bank may be letting the currency weaken amid the intensifying trade war.
Oil prices edged higher, buoyed by Middle East tensions though gains were checked by trade war concerns. Saudi Arabia said two of its oil tankers were among those attacked off the coast of the United Arab Emirates, describing it as an attempt to undermine security of supply amid United States-Iran tensions.
US crude was 0.33 percent higher at $61.24 per barrel while Brent crude gained 0.36 percent to $70.48 per barrel.Elsewhere, gold gave up gains after earlier rising amid broader market jitters. Spot gold was flat at $1,299.35 per ounce. Bitcoin gained 2.2 percent to $7,984.11.