AFP, HONG KONG: A rebound across Asian markets ran out of steam yesterday, with most falling back into the red and extending the previous day’s hammering.

Traders had started the day on a bright note as they took their lead from a surge on Wall Street and ate into Tuesday’s deep losses.

The gains, which saw Tokyo and Hong Kong jump sharply, came as analysts said they had expected a pullback following months of rises that sent world markets to record or multi-year highs.

However, as the day wore on selling began to kick in. By the end of the day Tokyo had added just 0.2 per cent—having opened almost three per cent up—while Shanghai lost 1.8 per cent and Seoul plunged 2.3 per cent.

Singapore was down 0.6 per cent and Hong Kong closed 0.9 per cent lower, extending a more than five per cent loss in Hong Kong Tuesday. Wellington, Mumbai and Kuala Lumpur also fell, though Sydney held up to close 0.8 per cent higher while Taipei climbed 1.4 per cent.

Asian trading floors were a sea of red Tuesday after a record one-day points drop on the Dow sparked panic selling, wiping billions from valuations on worries about rising US interest rates.

Profit-taking also played a big role in the retreat after the buying euphoria, fuelled by optimism in the world economy and strong corporate earnings.

But while markets stutter, analysts remain upbeat.

“The pullback may be considered a healthy correction,” Candice Bangsund, a fund manager in Montreal at Fiera Capital, told Bloomberg News.

“The favourable conditions that have underpinned the stock market rally over the last year remain largely intact at this time—the global expansion continues and corporate earnings remain in acceleration mode.”

And Greg McKenna, chief market strategist at AxiTrader, said: “At the moment, the safe bet is that this was part of the so-called ‘sell-off we had to have’.”

With dealers looking to safer assets yesterday the dollar resumed its falls against the yen, while it pared morning losses against higher-yielding currencies such as the Australian dollar, South Korean won and Thai baht.

Energy firms across Asia saw sharp afternoon selling yesterday, with PetroChina, CNOOC and Sinopec all performing a U-turn in Hong Kong, while Inpex in Tokyo and Woodside Petroleum in Sydney saw morning gains slashed.

Oil prices held on to their gains, however, after a report showed US stockpiles not increasing as much as forecast last week.

Bitcoin was up around 15 per cent at $7,500, a day after it fell briefly below the $6,000 mark for the first time since mid-November. However, it is still well down from its record highs near $20,000 seen just six weeks ago

In early European trade London rose 0.8 per cent after a 2.6 per cent fall Tuesday. Paris jumped 0.4 per cent and Frankfurt was 0.6 per cent higher.