Asian markets were mixed after a seesaw session, with Tokyo diving and Shanghai extending its worst rout in almost 20 years, while other regional markets bounced into positive territory.
The US dollar remained weak and oil prices stayed in the doldrums after finishing Monday below $US40 a barrel for the first time in six years.
Tokyo dropped 3.85 per cent to close 733.98 points lower at 17,806.70 - its sixth straight day of falls and the lowest finish since mid-February.
But other regional shares bounced back into positive territory after a bruising session overnight that saw Wall Street fall the most since the height of the financial crisis and European equities slump.
Sydney closed up 2.72 per cent or 136.02 points at 5,137.30, while Seoul rose 0.92 per cent, or 16.82 points, at 1,846.63 and Hong Kong added 0.72 per cent, or 153.39 points, to close at 21,404.96.
"It will take a big policy reaction out of China" to trigger a proper rebound in global shares, Isao Kubo a strategist at Nissay Asset Management, told Bloomberg News.
"It's best to expect high volatility for the foreseeable future rather than jump to conclusions about if this is the end or not."
Global equities took a battering overnight after an almost 8.50 per cent slump in Shanghai - the heaviest daily loss since 2007 - sparked panic among world investors.
World equity markets have seen some $US5 trillion ($A6.98 trillion) wiped off their value since China's surprise devaluation of the yuan on August 11 added to fears the world's second largest economy is weaker than thought.
Chinese shares have been on a roller-coaster ride after a year-long debt-fuelled rally collapsed in mid-June, prompting the government to unleash a vast package of measures to support shares.
In the latest such move Beijing said Sunday the state pension fund will now buy stocks. On Tuesday the central bank injected 150 billion yuan ($A32.5 billion) into the money market to ease tight liquidity.
But dealers said the failure to launch the new monetary easing measures, which the market had been hoping for, had knocked confidence.
"That shows to investors around the world the Chinese are running out of room in terms of being able to support the market," Ankur Patel, chief investment officer at R-Squared Macro Management, told Bloomberg News.
The US dollar remained weak at Y119.15, up from Y118.51 in New York trade Monday but dramatically weaker than Y122.06 seen in US trading on Friday.
The euro stood at $US1.1550 and Y138.10 in Tokyo compared with $US1.1606 and Y137.55 in New York overnight.
US benchmark West Texas Intermediate (WTI) for October delivery was trading at $US38.97 after closing at $US38.24 a barrel on the New York Mercantile Exchange, its first below-$US40 close since February 2009.
Brent North Sea crude for October, the international benchmark, was at $US43.43 a barrel after closing at $US43.04 a barrel in London, its lowest level since March 2009.
Gold traded at $US1,150.75 compared with $US1,154.00 late Monday.
In other markets:
- Taipei added 3.58 per cent, or 265.30 points, to 7,675.64.
Taiwan Semiconductor Manufacturing Co rose 7.39 per cent to Tw$123.50 while Hon Hai Precision advanced 4.17 per cent to Tw$85.0.
- Wellington added 0.11 per cent, or 5.98 points, to 5,613.29.
Contact Energy rose 2.70 per cent to NZ$5.32 and Air New Zealand was down 0.75 per cent to NZ$2.65.
- Manila rose 0.58 per cent, or 39.33 points, to 6,830.34 although trading was suspended for much of the day due to technical problems.
Ayala Land was down 0.74 per cent to 33.50 pesos, Universal Robina was unchanged at 180 pesos and BDO Unibank was down 0.95 per cent at 94.10 pesos.
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