Japan's Nikkei average index eased slightly in Tuesday to end at a four-week closing low for the third session in a row, though the eye-catching move of the day was the 12.4 percent rebound in shares of embattled TV maker Sharp Corp.
The turnaround in Sharp came as doubts faded over Hon Hai Precision Industry's potential investment after its Chairman Terry Gou said he is demanding a management role in Sharp as part of an equity tie-up.
Gou's abrupt departure from Japan last week had fuelled an earlier sell off in Sharp that saw the stock fall 18 percent in the previous two sessions.
In the overall market, investors were caught between concerns over slowing economic growth, both in Asia and abroad, and hopes that central banks would soon act to stimulate their economies.
"This month is going to be difficult -- there's obviously a gap between market expectations and central bank intentions, but it remains to be seen how big the discrepancy is," said Tetsuro Ii, CEO of Commons Asset Management.
"Domestically the fundamentals are bad, particularly GDP figures, and the growing signs of trouble in Asian economies only add to the pressure," he added.
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The Nikkei eased 0.1 percent to 8,775.51, falling for the four straight session but held above its 75-day moving average at 8,768.48.
September tends to be the weakest month for the Nikkei, with an average monthly fall of 1.2 percent between 1971 and 2011.
The benchmark is up 3.8 percent this year, underperforming a 11.8 percent rise in the U.S. S&P 500 and a 9 percent gain in the pan-European FTSEurofirst 300 index.
Among defensives, telecommunications firm Softbank Corp was the second most actively traded stock, losing 2.4 percent, while the food sector shed 1.4 percent.
Japan Tobacco Inc sagged 4 percent after the Russian health ministry proposed a law to ban smoking in public places.
By contrast, some beaten-down stocks found favour. The shipping sector rose 0.5 percent and the mining sector gained 0.8 percent.
"Someone out there is having a little bit of a switch out of the defensive into some of these cyclicals again," a senior dealer at a foreign bank said.
The broader Topix slipped 0.3 percent to 726.69, with nearly 1.47 billion shares changing hands, down from Monday's 1.6 billion but up from last week's average of 1.41 billion.
"It's not likely anyone is going long on riskier stocks, it's probably just an adjustment period where a bit of bargain hunting has prompted some investors to cover their shorts," said Masashi Akutsu, equity strategist at SMBC Nikko Securities.
Sharp, Pioneer rally
Aside from renewed confidence that Hon Hai may invest, Sharp's announcement that it has handed over a 9.2 percent stake in car navigation maker Pioneer Corp <6773.T> to its main banks as collateral for fresh loans was also seen as positive.
Short selling in Sharp was high, with 93.78 percent of its stock that is available to be borrowed out on loan as of August 31, up from a near three-week low of 87.63 percent on August 27, according to data provider Markit.
Pioneer climbed 4.2 percent on the back of Sharp's regulatory filing as it removed uncertainty that the struggling TV maker would offload its stake in Pioneer to raise cash.
Other gainers included DeNA Co Ltd, which rose 2.8 percent after Morgan Stanley MUFG lifted its price target on the social gaming company and kept its 'overweight' rating.