Most Asian stock markets extended falls into a second day after China's premier expressed doubts that the country could meet this year's inflation target, fueling investor fears of rising interest rates.
But some big markets such as Japan recovered some from a sell-off yesterday amid expectations the Federal Reserve's meeting later in the day will yield steep US rate cuts.
European shares were also set to gain, with Britain's FTSE 100 and France's CAC-40 seen up as much as 1.6 per cent, according to financial bookmakers.
Still, nerves remain frayed, with the dollar staying weak amid doubts about whether strong monetary easing in the United States will be enough to tackle the global financial crisis that threatens to further weaken the world's biggest economy.
Metals prices were also weak after Monday's sell-off amid expectations of slowing demand, while oil remained well off a record hit the previous days. Gold steadied around $1,000 an ounce.
The MSCI's measure of Asian stocks outside Japan reversed earlier gains to fall 0.3 per cent as of 6.35am, trading close to levels last seen in August.
The index had plunged 4.5 per cent on Monday, leaving it down 20 per cent for the year and 29 per cent below a November 1st record.
Shares in Shanghai dived 4.3 per cent to hit an eight-month low, as investors dumped newcomers listed this year, such as China Railway Construction.
Hong Kong's main index fell nearly 2 per cent, while markets in India and Singapore were down less than 1 per cent.