Asian shares staged a mild rebound on Wednesday after world stocks hit eight-week lows the previous day on worries about global economic growth, although the British pound stayed firm on hopes for a Brexit deal.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 per cent, while Japan's Nikkei average added 0.2 per cent and the Australian benchmark was up just 0.1 per cent.
In China, the mainland benchmark Shanghai Composite was flat in choppy trade, although Hong Kong's Hang Seng advanced 0.6 per cent.
"As uncertainty continues to prevail in financial markets across the world, many investors are staying on the sidelines until more clarity emerges in U.S. Treasury and Chinese markets," said Yasuo Sakuma, chief investment officer at Libra Investments.
Benchmark U.S. 10-year Treasury yields touched a 7-1/2-year peak of 3.261 per cent and those on 30-year bonds hit their highest in more than four years, but later fell back.
Some traders say comments from U.S. President Donald Trump on Tuesday helped curb the rise in Treasuries' yields. He said the Federal Reserve was going too fast in raising rates when inflation was minimal and government data pointed to a strong economy.
Italian government bond yields also fell from multi-year highs after Economy Minister Giovanni Tria pledged to do whatever is necessary to restore calm if market turbulence turns into a financial crisis.
U.S. stock markets were uneventful. The Dow Jones Industrial Average fell 0.21 per cent while the S&P 500 and the Nasdaq Composite were little changed.
The MSCI All-Country World index, which tracks shares in 47 countries, hit its lowest level since August 16 overnight. It last traded up 0.2 per cent on the day.
The International Monetary Fund cut its global economic growth forecasts for 2018 and 2019, as well as its U.S. and China estimates for next year, saying the two countries would feel the brunt of the impact of their trade war next year.
The dollar dipped due to a fall in U.S. bond yields after touching a seven-week peak against a basket of currencies. The dollar index last traded flat at 95.560.
Sterling continued to gain after a report rekindled hopes that Britain and the European Union are on the brink of a Brexit deal. It last traded up 0.2 per cent at $1.3172.
"We can't be too optimistic about the Brexit process, because even if a deal can be struck at an anticipated special EU summit in November, it has to get through the British Parliament," said Kengo Suzuki, chief FX strategist at Mizuho Securities.
The offshore yuan rose 0.1 per cent to 6.9200 after falling earlier this week to as low as 6.9371 to the dollar, its weakest since mid-August.
The sentiment was calm in the spot market, where the yuan opened at 6.9220 per dollar and was changing hands at 6.9209 by midday, 51 pips stronger than the previous late session close.
But in the long run, analysts expect the Chinese currency to trend lower amid economic slowdown fears, with current and former central bank officials downplaying the significance of the yuan breaking through the psychologically important 7 level.
Oil prices dropped on Wednesday after the IMF lowered its global growth forecasts, although prices were somewhat supported as Hurricane Michael churned towards Florida, closing down nearly 40 per cent of U.S. Gulf of Mexico crude output.
U.S. crude oil futures dropped 0.4 per cent to $74.68 a barrel and Brent crude futures eased 0.2 per cent to $84.86 a barrel.
Gold prices edged up 0.1 per cent as investors remained cautious after U.S. Treasury yields hit then retreated from multi-year highs.
(With inputs from agencies.)