As Chinese stocks steadied a little on Monday, two other major Asian indexes flirted with entering a bear market as investor concerns about the world's second-largest economy and falling oil prices persisted.
The Shanghai Composite Index finished up 0.4% at 2913.84, reflecting moves by Chinese authorities to stabilize the yuan and bargain hunting by local investors. The benchmark fell on Friday into bear-market territory?defined as a drop of at least 20% from a recent high?and is down 17.7% this year.
Traders and analysts attributed the gains partly to an announcement Monday that China will require foreign banks engaged in offshore yuan trading to place reserves with the central bank. The step was aimed at speculators, who have been pushing the yuan sharply lower in offshore trading as expectations on China's economy sour. The offshore Chinese yuan was last up 0.4%, after the central bank guided its onshore counterpart stronger earlier Monday.
The moves that reassured Chinese investors did little to help shares elsewhere, however.
Australia's S&P ASX 200 was down 0.7% while the Nikkei Stock Average lost 1.1%. Both benchmarks have lost roughly 19% from their recent highs, nearing bear-market territory.
The Nikkei, at 16955.57, closed below 17000 for the first time since September, amid worries that a strengthening Japanese yen could prompt some Japanese exporters to revise down their earnings projections.
Hong Kong's Hang Seng Index ended down 1.5% and South Korea's Kospi was flat.
India, which is expected to grow faster than many Asian countries, has also been caught up in the region's losses. The country's benchmark S&P BSE Sensex had lost 6.3% of its value this year through Friday. On Monday, the Sensex was trading slightly lower.
"You have a little bit of a breather" with China recovering, said Tareck Horchani, senior sales trader at Saxo Capital Markets, though he doesn't believe it is time for investors to get back into most markets in the region. "Overall, the market is very nervous about oil going lower," he said.
A 2.7% fall in the Brent oil benchmark to $28.18 hurt the region's energy shares. The sector was down 2.5% in Hong Kong and 3.4% in Australia. Tokyo-listed oil-explorer Inpex Corp. dropped 1.5%..
In China, the gains Monday may be short lived. Investors expect China to report on Tuesday that the economy grew at around 7% last year?the slowest pace in a quarter-century.
"We need more than a stabilizing yuan to stop losses" in China's stock market in the longer term, said Angus Nicholson, market analyst at brokerage IG. "The question [tomorrow] is whether the market takes [the China data] at face value, whether [investors] think the numbers are real."
Another worry by analysts is that the Shanghai benchmark is nearing 2,500, a level that could trigger widespread margin calls. Margins loans?money borrowed by investors to fund share purchases?fueled a rally in Shanghai early last year. But when the market began to crumble, brokerages began calling investors to pay back loans, making losses snowball.
Still, Zhang Xin, an analyst at Guotai Junan Securities, said "institutions, such as mutual funds may be increasing positions, betting on a short-term rebound." Local investors were watching closely to see whether the Shanghai benchmark would hold above the key level of 2850.71, the last low it reached on Aug. 26?which it did on Monday.
Analysts said investors bought shares on Monday that would help them capitalize on the anticipated changes by the Chinese government aimed at making its state-owned enterprises more efficient. COFCO Property (Group) Co. Ltd. rose 9.4% and COFCO Biochemical Anhui Co. Ltd. jumped by the 10% daily limit allowed by authorities.
Investors also bought up the country's start-up shares, usually the first to rebound and fall during market volatility. The ChiNext Composite Index, a gauge of the country's Nasdaq-like board, closed up 3.2%.
The Hong Kong dollar sunk to a fresh four-year low of HK$7.801 to one U.S. dollar, even as the city's de-facto central bank reiterated Monday that it remains committed to keeping the currency pegged to the U.S. dollar. Monday was the local dollar's third session of losses, as investors worried that the city's economy could weaken along with that of China.
The Japanese yen, down 0.2% against the U.S. dollar in Asia Monday, has risen 2.3% this year to its strongest level in almost five months. A stronger yen hurts Japanese exporters because their goods become more expensive to overseas buyers.
Gold prices were last up 0.1% at $1,092 per troy ounce.
Dominique Fong, Shen Hong, Shefali Anand and Yifan Xie contributed to this article.