Asian shares fell Wednesday as concerns about Turkey's financial crisis weighed on investor sentiment but the crisis-hit lira took a breather following the turmoil of the past week.
Wall Street and the Turkish currency clawed back ground overnight after a rout that started Friday and saw the unit plunge to record lows.
Equity markets had also gone into freefall on concerns that a financial crisis could spread globally.
Turkey's already fragile economy went into a tailspin when US President Donald Trump announced that Washington was ramping up aluminium and steel tariffs, the latest salvo in an escalating dispute between the NATO allies.
The lira was steady at 6.53 to the dollar and 7.43 to the euro in Asian morning trade, well off the record lows of 7.24 to the dollar and 8.12 to the euro seen Monday. It is still sharply down from Friday.
"The pressure has been relieved, but not released, on the Turkish lira as traders tire of selling after the currency seems to have found a base," said Greg McKenna, chief market strategist at AxiTrader.
The currency had been falling for weeks due to concerns over a faltering economy but the crisis escalated sharply as Trump upped the pressure on Turkey over the detention of an American pastor.
While market pressures have eased for now, analysts believe the diplomatic row is far from over and could still weigh on stocks.
President Recep Tayyip Erdogan shows no sign of backing down, saying Tuesday that Turkey would boycott US electronic goods.
In New York Tuesday, the Dow, S&P 500 and the Nasdaq all posted gains of at least half a percent, as fears eased that the problems with the lira might affect other emerging economies and currencies.
But Asian equities slipped back in morning trade, with risk appetite still muted. Hong Kong was down 1.5 percent, Shanghai was off 1.3 percent, Tokyo slipped 0.3 percent and Sydney fell 0.5 percent. Seoul was closed for a holiday.
Jingyi Pan, market strategist at trading group IG, said the rise in US equities had set a "more benign tone" for Asian markets, which were more stable than earlier in the week.
But she added that early indications were that the region's stock markets "are yet to be aligned with the pick up in stateside indices".
Disappointing data from China, which showed the pace of investment slumping to a record low and retail sales growth slowing, also weighed on sentiment in Asia.
The data was a "dud" with all the economic measures "undershooting expectations," said AxiTrader's McKenna. "That fairly screams slowdown."
- Key figures around 0330 GMT -
Dollar/Turkish lira: UP at 6.53 lira from 6.40 lira late Tuesday
Euro/Turkish lira: UP at 7.43 from 7.26 lira
Euro/dollar: DOWN at $1.1322 from $1.1345
Pound/dollar: DOWN at $1.2698 from $1.2714
Dollar/yen: UP at 111.24 from 111.21 yen
Tokyo - Nikkei 225: DOWN 0.3 percent at 22,270.90
Hong Kong - Hang Seng: DOWN 1.5 percent at 27,329.24
Shanghai - Composite: DOWN 1.3 percent at 2,744.47
Oil - Brent Crude: DOWN 20 cents at $72.26 per barrel
Oil - West Texas Intermediate: DOWN 27 cents at $66.77 per barrel
New York - Dow Jones: UP 0.5 percent at 25,299.92 (close)
London - FTSE 100: DOWN 0.4 percent at 7,611.64 (close)
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