By Agence France-Presse
Wall Street provided a positive lead but the day began with another selling frenzy that saw Hong Kong plunge more than three percent at one point before bargain-buying provided a small bounce.
Still there are particular fears for Shanghai, which has plunged more than 20 percent from its January high as the colossal Chinese economy shows signs of slowing, even before Donald Trump's threatened tariffs kick in Friday.
The yuan extended losses and has fallen around eight percent since the end of March -- it is now at an 11-month low -- adding to fears about the mainland as leaders struggle to cap a debt mountain while also supporting growth.
Analysts dismissed some claims that authorities are allowing the Chinese currency to weaken in order to offset the impact of any tariffs.
"We have already seen the impact on Chinese investors' anxiety over a weaker currency and subsequent capital outflow in 2015-16," said Tai Hui, JP Morgan Asset Management chief market strategist for Asia-Pacific.
"This is not a can of worms that Beijing wants to open again."
The US Commerce Department on Monday added to the standoff by recommending against the approval of China Mobile's seven-year-old application to enter the US market, citing national security concerns.
The call comes as US lawmakers debate reimposing a ban on US firms selling to Chinese telecoms equipment maker ZTE over security considerations, putting its survival in peril.
In share trading Hong Kong sank more than three percent at one point as traders returned from a long weekend break to play catch up with the rest of Asia's retreat on Monday.
The Hang Seng then edged back to sit 1.3 percent lower. China Mobile's shares were down more than two percent in late trade.
Crude edges back
Shanghai rose 0.4 percent and Singapore lost 0.2 percent, while Tokyo ended 0.1 percent lower.
Sydney added 0.5 percent, Seoul rose 0.1 percent and Wellington jumped more than one percent. Taipei and Jakarta fell but Manila and Bangkok rose.
In early European trade London rose 0.5 percent, Paris added 0.4 percent and Frankfurt gained 0.7 percent.
While the focus this week is mainly on the hundreds of billions worth of goods targeted by US-China tariffs, Trump has also taken aim at the European Union and Canada, which have both announced retaliatory measures, adding to global trade war warnings.
Oil prices edged up in Asia after taking a hit on Monday from a tweet by Trump at the weekend saying Saudi Arabia had agreed to his request to ramp up output.
Despite the possible increase in output, analysts said they saw prices continuing to rise.
"The market remains supported by a production outage in Libya and the overhang from recent US... data which suggest US supplies are running very tight," said Stephen Innes, head of Asia-Pacific trade at OANDA.
The euro held up against the dollar after German Chancellor Angela Merkel reached a compromise deal on immigration with her coalition partners, keeping her government intact for now and averting a crisis in Europe's biggest economy.
Key figures around 0720 GMT
Tokyo - Nikkei 225: DOWN 0.1 percent at 21,785.54 (close)
Hong Kong - Hang Seng: DOWN 1.7 percent at 28,583.32
Shanghai - Composite: UP 0.4 percent at 2,786.89 (close)
London - FTSE 100: UP 0.5 percent at 7,581.71
Euro/dollar: UP at $1.1645 from $1.1642 at 2100 GMT
Pound/dollar: UP at $1.3145 from $1.3143
Dollar/yen: UP at 111.00 yen from 110.86 yen
Oil - West Texas Intermediate: UP 79 cents at $74.73 per barrel
Oil - Brent Crude: UP 60 cents at $77.90 per barrel
New York - Dow: UP 0.2 percent at 24,307.18 (close)