TOKYO Asian shares tried to steady on Thursday following a tumble sparked by concerns about China's economic outlook, and the dollar languished near a two-year low against the Swiss franc.
On Wednesday, Chinese money-market rates rose to three-month highs after the central bank failed to inject cash for a second day as regulators showed signs of concern that loose liquidity might be fuelling another round of risky credit growth.
MSCI's broadest index of Asia-Pacific shares outside Japan was flat after shedding 0.9 percent on Wednesday to end a four-day winning streak.
Tokyo's Nikkei futures fell 0.8 percent as the yen gained ground on the dollar, indicating a softer open on Thursday after
the previous session's 2 percent decline.
Investors will get further clues to the health of the world's second-largest economy with a preliminary survey on Chinese manufacturing activity data due at 0145 GMT.
"The initial reaction to the rise in China's money market rates has translated into lower U.S. Treasury yields and weaker equity markets," analysts at BNP Paribas wrote in a note.
"The pullback in risk sentiment should remain temporary as the delay to the Fed's QE tapering plans until the first quarter of 2014 makes long carry positions attractive. This implies that commodity and emerging market currencies should regain the ground lost over the past 24 hours."
Before the concerns over China checked the market bullishness, global equity markets had been rallying after the resolution of the U.S. budget impasse and on expectations the Federal Reserve would extend its cheap money stimulus into 2014.
After hitting a run of record highs, the U.S. Standard & Poor's 500 index fell 0.5 percent on Wednesday as shares of heavy-equipment maker Caterpillar and semiconductor companies tumbled after reporting earnings.
U.S. S&P E-mini futures were flat in early Asian trade on Thursday.
The dollar was at 0.8923 franc, just above a two-year low of 0.8908 hit on Wednesday. It was holding at 97.39 yen, near a two-week low touched in the previous session.
U.S. Treasury yields fell to three-months lows on more bets that the Fed will maintain its stimulus efforts into next year.
U.S. crude prices rose 0.2 percent to about $97 a barrel after falling to a 3-1/2 month low of $96.16 on Wednesday.
(Editing by John Mair)