HONG KONG: Asian markets rebounded Thursday as China tried to allay concerns it would curb lending that's helped fuel a recovery in the region's second-biggest economy. European markets were mixed.

Japanese shares, meanwhile, closed at their highest level in almost 10 months as major carmakers like Nissan Motor and Honda Motor jumped on stronger-than-expected earnings. Oil prices were steady after plunging overnight.

The session was a modest turnaround from the region-wide tumble Wednesday, led by a 5 percent drop in Shanghai's index as investors grew panicked over reports China would try to dam the flood of bank lending that's boosted the economy and local stocks.

The central bank tried to soothe rattled nerves, promising to maintain a "relaxed monetary policy" and to use market tools rather than administrative controls to regulate credit growth.

China and other developing markets have surged this year — China and India are up nearly 80 percent and 60 percent, respectively — on hopes they can help buoy the world economy at a time when Western countries are reeling from recession.

But much of their advance has been driven by liquidity brought on by easier monetary controls and government stimulus, something analysts worry can camouflage lingering problems in the economy.

"A bit of caution is starting to come back because the market has done so well in such a short term," said Song Seng Wun, economist at CIMB-GK research in Singapore. "In this kind of market, sometimes it is good to look a gift horse in the mouth."

After trading in the red much of the day, Asian markets came back to end higher.

Shanghai's benchmark added 1.7 percent to 3,321.56 while Hong Kong's Hang Seng edged up 98.58, or 0.5 percent, to 20,234.08.

In Japan, the Nikkei 225 stock average rose 51.97, or 0.5 percent, to 10,165.21. South Korea's Kospi gained 0.7 percent, Australia's index advanced 1.2 percent and Singapore's market was up 0.5 percent.

European benchmarks were mixed, with benchmarks in Britain and France up 0.5 percent and Germany's market off 0.1 percent.

In New York overnight, Wall Street continued to search for direction, closing out its fourth straight day of minimal moves, as sinking commodities prices on demand concerns weighed on the broader market.

The Dow fell 26.00, or 0.3 percent, to 9,070.72.

The broader Standard & Poor's 500 index fell 4.47, or 0.5 percent, to 975.15, while the Nasdaq composite index slid 7.75, or 0.4 percent, to 1,967.76.

Oil prices crept higher in Asia, with benchmark crude for September delivery up 2 cents to $63.37 a barrel. Overnight, the contract tanked $3.88, or nearly 6 percent.

The dollar was down slightly at 95.04 yen from 95.05 yen. The euro rose to $1.4056 from $1.4069.