Asian stock markets ended mostly lower Thursday, with Chinese banks struggling in Hong Kong, as European sovereign debt concerns resurfaced after a dismal result from Spanish bond auctions Wednesday.
Hong Kong investors returning from a one-day holiday pushed the Hang Seng Index down 1% to 20593.00.
The Shanghai Composite Index, trading for the first time this week, was a sharp contrast, moving off early losses to finish with a gain of 1.7% at 2302.24; some reports pointed to the more-than-doubling of the quota for foreign investment to $80 billion.
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Japan's Nikkei Stock Average lost another 0.5% to 9767.61, following up on Wednesday's fall, which was the biggest of the year and took the index back below the key 10000 level for the first time in almost a month. Australia's S&P/ASX 200 index fell 0.3% to 4319.8.
South Korea's Kospi joined Shanghai on the positive side, rising 0.5% to 2028.77.
U.S. and European shares closed with steep losses Wednesday after a weak bond auction in Spain renewed concerns about Europe's debt problems. Markets were still reeling from minutes of the U.S. Fed's latest interest-rate meeting, out earlier in the week. They showed only two of the central bank's members suggesting more bond-buying could become necessary if the economy loses momentum, damping hopes for more such easing.
"Risk markets look to be grieving the fact that the 'Bernanke put' may be less supportive than the past," said strategists at BNP Paribas. The "Bernanke put" refers to the notion that Fed-induced liquidity would support the stock market.
Banks were notably weak in Hong Kong, with Bank of Communications down 3.2%, Bank of China off 1.6%, Agricultural Bank of China 2.6% lower and Industrial & Commercial Bank of China (ICBC) down 1.6%.
Chinese Premier Wen Jiabao had said Tuesday that it was too easy for China's state-run banks to make profits, and that the government needs to break their "monopoly."
Analysts at Bernstein Research called it "a warning for the large banks that reforms are coming (after a three-year hiatus) that will alter the competitive landscape."
They added, though, that they expect the pace of reform to be moderate, "allowing the better-run large banks ... to adapt," citing ICBC and China Construction Bank as likely outperformers. China Construction Bank's Hong Kong shares traded down 2% Thursday.
But commodity stocks moved off lows in Hong Kong and gained in Shanghai, with Aluminum Corp. of China up 3.7% in Shanghai but down 0.3% in Hong Kong. Jiangxi Copper was up 2.7% in Shanghai, but down 1.2% in Hong Kong.
Other gainers in Shanghai included Citic Securities, up 5.8%, and real-estate major Gemdale, up 1%. Airlines did well, benefiting from a drop in crude-oil prices since the last Shanghai equities session: Air China climbed 1.9% and China Eastern Airlines rose 1.7%.
Air China's Hong Kong shares lost 1.5%, but China Eastern's were up 2%.
A drop in commodity prices overnight hit other Asia resource companies, with Tokyo-listed JFE Holdings down 2%, and Sumitomo Metal Metal Mining lower by 1.2%.
Miners were notable decliners in Australia, where BHP Billiton fell 0.9% and Rio Tinto retreated 1.7%.
While the U.S. dollar gained against most currencies, it declined against the safe-haven yen; the dollar was a at ¥81.92 Thursday afternoon, down from ¥82.49 late Wednesday in New York. The stronger yen and European concerns combined to send most major Japanese exporters lower.
Honda Motor lost 1.1% and Fuji Heavy Industries fell 0.8%, while Nikon surrendered 1.9% after a downgrade to hold from buy at BNP Paribas.
Japanese shipping shares also sank, with Mitsui O.S.K . Lines down 2.3%, and Nippon Yusen K.K . off 1.2%.
In Hong Kong, ports operator China Merchants Holdings International fell 3.6%, while rival Cosco Pacific fell 1.4%.
In Seoul, STX Pan Ocean dropped 3.8% and Hyundai Heavy Industries lost 1.3%.
Write to John Phillips at John.phillips@dowjones.com
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