Asian stocks regained a semblance of stability on Wednesday following days of steep losses, but sentiment remained fragile as benign Chinese inflation data and gloom in the euro zone economy added to signs of a faltering global economic recovery.

In a reflection of the cautious mood, spreadbetters saw a lower open for Europe, forecasting Britain's FTSE to start as much as 0.2 per cent lower, Germany's DAX down 0.17 per cent and France's CAX 0.4 per cent lower.

"Against a backdrop of deteriorating economic data it will remain difficult for stocks to rally meaningfully, unless earnings and guidance expectations come in above consensus, not only in the U.S., but also in Europe as well," Michael Hewson, chief market analyst at CMC Markets, wrote in a note to clients.

The dollar steadied after disappointing data out of Germany and Britain checked the euro's recent bounce.

MSCI's broadest index of Asia-Pacific shares outside Japan managed to put on 0.27 per cent, pulling away from seven-month lows hit at the start of the week.

Tokyo's Nikkei climbed 0.6 per cent, poised to end a five-day losing streak that drove it to a two-month trough on Tuesday.

"For now the market has calmed and there's some short relief. It's a natural rebound," said Takashi Hiroki, chief strategist at Monex in Tokyo.

Concerns over faltering global growth triggered a bruising selloff in global equity markets in the past week as a run of weak data showed no signs of abating.

Latest numbers from China showed the country's inflation rate slowed more than expected in September to a near five-year low, adding to concerns the world's second biggest economy continues to lose momentum despite a raft of stimulus measures.

"Policymakers in Beijing should begin to be concerned that global disinflationary pressures are spreading to China," said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong.

Overnight, a closely watched ZEW survey showed German analyst and investor morale fell below zero for the first time in nearly two years in October.

Adding to the gloom, the German government cut its growth forecasts, euro zone industrial production fell, British inflation slowed sharply in September and Fitch warned it may cut France's credit rating.

Underscoring the worries over growth, South Korea's central bank cut its policy interest rate for the second time in three months.

The heightened risk-averse environment allowed safe-haven government debt to thrive.

US Treasuries and German Bunds have rallied this week, with the yields on the latter hitting record lows on Tuesday after data reinforced fears the Euro Zone may be slipping into recession.

The dollar index, a gauge of the greenback's strength against a basket of major currencies, was up 0.1 percent at 85.922 as the downbeat German data took a toll on the euro.

The dollar edged up 0.2 percent to 107.26 yen, having pulled back from a one-month low of 106.68 hit the previous day.

The euro traded little changed at $1.2641.

In commodities, U.S. crude bounced slightly after posting its biggest percentage loss in about two years overnight on a downgrade in global oil consumption forecasts, projections for another big boost in shale oil and reluctance by OPEC members to cut output.

US crude was up 34 cents at $82.18 a barrel, although mounting evidence of slackening demand and unrelenting US shale output are expected to keep applying downward pressure on the commodity in the mid- to long-term.

comment COMMENT NOW