Asian shares on Wednesday struggled to move away from two-year lows the previous day after big falls in Chinese shares raised fresh fear about the stability of China's economy.
Japan's Nikkei fell 0.2 percent. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 percent, recovering from a two-year low hit on Tuesday, though it was still down almost 6 percent this month.
The Shanghai Composite Index closed down 6.1 percent on Tuesday in its biggest daily decline since July 27, denting hopes that Chinese share markets are starting to stabilize after Beijing's efforts since last month to stem their rout.
Shares of importers and firms with high US dollar-denominated debt have been under pressure following last week's yuan devaluation.
"A six-percent fall in Chinese share prices is not something you can ignore," said Hirokazu Kabeya, chief global strategist at Daiwa Securities, adding that concerns are increasing "just as they started to fall" after Chinese authorities suggested they could roll back their market-support steps.
The specter of a slowdown in China's economic growth and a US interest rate hike hit many asset markets in emerging economies the hardest.
MSCI's emerging market index fell to its lowest level since October 2011. It has dropped more than 20 percent from this year's peak hit in April.
Wall Street shares also retreated, with the S&P 500 sliding 0.26 percent, pressured by weak earnings from retail giant Wal-Mart.
Concerns about slowing demand for commodities from China also hit copper prices, which slid to a six-year low of $4,983 a tonne, breaking the psychological $5,000 level. It last stood at $5,018.50 a tonne.
That in turn knocked down copper exporters, with the Chilean peso sinking to 12-year lows.
A number of emerging market currencies are facing capital outflows also as investors shift funds to the dollar, whose interest rates look set to rise.
Data on Tuesday showed US housing starts rose to a near eight-year high in July as builders ramped up construction of single-family homes, supporting the case for a rate hike.
Many investors and economists see the Fed as most likely to make its first hike in nearly a decade next month as the labor market continues to improve.
The minutes of the Federal Reserve's July meeting due later on Wednesday will be evaluated for any new clues on the Fed's policy stance.
The prospects of higher rates supported the dollar against most other currencies. The euro traded at $1.1026, having hit one-week low of $1.10165 on Tuesday.
The British pound also gained, rising to a 7 1/2-year high on a trade-weighted basis as UK inflation data released on Tuesday beat expectations, bolstering bets that the Bank of England will raise interest rates in the coming months.
"On top of the Fed, the Bank of England is likely to raise rates around the same time. Considering the UK is a global money center, simultaneous tightening could increase anxiety (on risk assets)," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.
US oil futures prices, which hit a 6 1/2-year low on Friday, rebounded on short-covering ahead of Thursday's expiry of the key front-month contract.
They stood at $42.36 per barrel, off Friday's low of $41.35.
That also helped to Brent, the London-traded global benchmark for oil, snap a three-day decline on Tuesday.