Asian markets rose Thursday on bargain-hunting by investors following a week of heavy losses due to anxiety over the deepening US-China trade war.
But tensions remained high, prompting a rush on safe-haven assets such as bonds, gold and the Japanese yen.
Bond yields plunged on Wednesday, with the benchmark US government 10-year note dropping to multi-year lows, while French and German yields, already in negative territory, set new record lows.
In Tokyo, the Nikkei gained 0.4 percent, after shedding more than 1,000 points in a four-day losing streak.
But investors stayed away from active buying with the yen remaining strong, raising worries for Japanese exporters' earnings and the impact on their repatriated profits.
Shanghai also climbed 0.9 percent, enjoying a boost after global index compiler MSCI announced it would increase the weighting of Chinese shares in its indices from 10 to 15 percent from late August.
Hong Kong rose 0.5 percent while Seoul added 0.6 percent. Sydney gained 0.8 percent but Singapore dropped 0.6 percent.
European stocks joined the rally as well, with London edging up 0.2 percent Thursday morning. Frankfurt added 0.8 percent while Paris jumped 1.1 percent.
- Yuan fix -
Equities had tumbled Monday after Beijing allowed the yuan to slide sharply against the dollar following US President Donald Trump's announcement that he would impose 10 percent tariffs on another $300 billion in Chinese goods starting September 1.
But Beijing's move to stabilise the yuan after both onshore and offshore rates dropped below the key 7.0 per dollar threshold helped to ease investor fears.
Even though the central bank set the currency's central parity rate above 7.0 for the first time in 11 years on Thursday, analysts were unruffled, saying the yuan fix was stronger than expected.
"The fact that it's only gone through 7 today and it didn't on Tuesday really tells you that they are signalling to the market that we don't want the currency to depreciate too quickly", said Julian Evans-Pritchard, senior China economist at Capital Economics.
"They don't want a very sharp, sudden move weaker that could result in a big jump in capital outflow. So they are trying to effectively manage the process and engineer a gradual depreciation," he told AFP.
Multiple rounds of tit-for-tat tariffs between the United States and China have hammered trade and raised concern for the health of the global economy.
Negotiators are set to reconvene in Washington in early September for another round of talks after last week's discussions in Shanghai, but hopes for an agreement are low.
- Rate cuts expected -
Interest rate cuts by central banks in India, Thailand and New Zealand and weak German industrial data underscored fears about economic growth being at risk around the world.
Markets now believe that key central banks will cut interest rates further to stave off, or at least alleviate, any coming recession, analysts said, warning however that they had limited opportunity to act.
"Lower rates have been a factor in the bull market, but at this point there is not a lot of room to cut from central banks," said Alfonso Esparza, senior market analyst at OANDA.
"Central banks around the globe have turned dovish and the moves by three central banks on Wednesday was a reminder of how limited the runway for easing is around the globe," he added.
- Key figures around 0800 GMT -
Tokyo - Nikkei 225: UP 0.4 percent at 20,593.35 (close)
Hong Kong - Hang Seng: UP 0.5 percent at 26,120.77 (close)
Shanghai - Composite: UP 0.9 percent at 2,794.55 (close)
London - FTSE 100: UP 0.2 percent at 7,215.29
Pound/dollar: UP at $1.2171 from $1.2140 around 2100 GMT
Euro/pound: DOWN at 92.16 pence from 92.26 pence
Euro/dollar: UP at $1.1216 from $1.1203
Dollar/yen: DOWN at 106.09 yen from 106.23 yen
Brent North Sea crude: UP $1.29 at $57.52 per barrel
West Texas Intermediate: UP $1.48 at $52.57 per barrel
New York - Dow: DOWN 0.1 percent at 26,007.07 (close)