But last week's sudden shift away from relatively risky assets such as equities and speculative bets such as yen-funded, high-yield plays still dominated sentiment. Wall St's strong rally of more than 1.5 percent on Tuesday saw little follow-through in other markets.

Tokyo's Nikkei index fell 0.47 percent, reversing an early gain and leaving Japan's benchmark index down 8 percent since Feb. 26. While other Asian markets firmed, Hong Kong's Hang Seng turned tail to end down 0.73 percent. European markets seemed to take their cue from this fresh hesitancy in Asia rather than New York's powerful bounce and S&P futures pointed to a slightly weaker opening later on Wall Street.

By 08:45 GMT, the FTSEurofirst 300 index of top European shares was 0.1 percent higher at 1,461.7. London's FTSE 100 was down 0.4 percent. "The market is now looking a little bit ahead to ECB tomorrow and payrolls on Friday, so I guess they are taking a breather after the very volatile moves we have seen," said Niels Christensen, FX strategist at Nordea in Copenhagen. The yen, which surged in tandem with equity market losses since last Monday as so-called carry trades were unwound, nudged higher on Tuesday after one day on the back foot. "This implies the markets have not sufficiently calmed down, and the yen still has a risk to bounce back again following the global equity markets development," analysts at Citigroup in London told clients in note.

Asian bourses failure to match Wall St's bounce was striking for many analysts. MSCI's index of non-Japan Asian shares was up 0.5 percent, with China's main index up two percent. "But losses in Tokyo and Hong Kong overshadowed the broader moves. The scenario that the US economy would see a soft landing has been somewhat destroyed," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

Although a lot of people, such as policy makers, keep saying the US economy is fine, investors remain worried. The global flight from risk of the past week was triggered on Tuesday last week by a sharp fall in Chinese stocks and worries about the US economy, and some analysts say it has further to run.

Among policymakers offering views on Wednesday was US Treasury Secretary Henry Paulson during his three-country tour of Asia. He predicted stable growth for the US economy but made no remarks on financial markets. Export stocks such as Canon, which fell 2.54 percent, were among the big losers as investors worried about the strength of demand in the United States, Asia's main export market.

Todayszaman

Labels: Business, Stock Exchange