Asian markets reversed early losses on Thursday on news that China's manufacturing sector was improving. However, upbeat Chinese data failed to undo the damage triggered by fears that the US Federal Reserve was on track to trim its asset buys later this year.
The Shanghai Composite was trading 0.25% lower or 5.12 points to 2,067.84
Hong Kong's Hang Seng was trading 0.59% lower or 129.00 points to 21688.73.
The Japanese Nikkei finished 0.44% lower or 59.16 points to 13,365.17.
Australia's S&P/ASX finished 0.48% lower or 24.30 points to 5,075.70.
South Korea's Kospi finished 0.98% lower or 18.34 points to 1,849.12.
China's manufacturing sector experienced a strong recovery in August with improved output and new orders, a positive sign that the world's second-largest economy is picking up pace after two quarters of slowdown. The HSBC flash China manufacturing purchasing managers' index (PMI) rose to a four-month high at 50.1 in August from 47.7 in July. That was well ahead of the economists' estimated reading of 48.3.
"China's manufacturing growth has started to stabilize on the back of modest improvements of new business and output. This is mainly driven by the initial filtering-through of recent fine-tuning measures and companies' restocking activities," said HSBC's chief China economist Hongbin Qu.
Positive Chinese data could not calm frayed nerves. Markets suffered early losses as the minutes of the US central bank's July meeting, released overnight, suggested the Fed could trim its massive monthly bond-buying programme as early as September.
The Fed's $85bn a month bond-buying program has stimulated the US economy and the markets the world over for a while now.
"The Fed certainly seems to have mastered the art of keeping the market guessing ... The only way forward is to continue closely watching US economic data for clues on how soon we can expect tapering to start," said IG Markets strategist Stan Shamu.
Wall Street Down
On Wall Street, indices finished lower as Fed fears weighed on investor sentiment. The Dow finished 105.44 points lower at 14,897.55, closing below the psychologically-important 15,000 level.
The S&P 500 index closed 9.55 points lower at 1,642.80 while the Nasdaq ended 13.80 points lower at 3,599.79,
Company Stock Movements
In Shanghai, textile producer Younger climbed 3% while automaker Changan Auto rose 2%. Industrial Bank gained 1.8% and China Merchants Bank added 1.1%.
In Hong Kong, oil and gas major Cnooc shed 0.8%.
In Sydney, gold miner Newcrest Mining lost 2.2% while resources major BHP Billiton shed 0.9%.
Atlas Iron dropped 6% as its underlying annual net profit was below analyst expectations. Rival iron ore miner Fortescue Metals added over 4% after it posted a 12% increase in annual profit.
Casino operator Echo Entertainment gained 1.5% after it reported a 7.6% increase in annual revenue.
In Tokyo, commercial vehicles maker Hino Motors dropped 5% while Mazda Motor was down 3%.
Pacific Metals shed 2.8%, automaker Isuzu Motors lost 2.7% and consumer electronics major Sony was down 1.8%.
Oil refiner Showa Shell Sekiyu and insurer T&D Holdings added 2.5% each. Dai-Ichi Life Insurance added 1.7%.
In Seoul, LG Display fell 1.9% while steelmaker Posco lost 1.1%. SK Telecom was down 3% while rival KT lost 1.6%