HONG KONG: Asian shares gave up early gains and turned lower on Wednesday as investors shrugged off an overnight rally in global stocks and looked to bonds in the absence of signs of a sustainable recovery in China and other emerging markets.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 percent after being up as much as 0.4 percent in early trades. On Tuesday, it hit an eight-week low.

Hong Kong shares led regional stocks lower with the benchmark index falling 1 percent, followed by Korea down 0.6 percent and losing 0.4 percent. They are the most vulnerable to a sustained downturn in the Chinese economy.

Japanese shares were among the rare bright spots in the region, with the Nikkei up 0.3 percent due to a broadly weak yen, though overall sentiment remained cautious.

"I'd think the markets are supported by lack of negative news flows. It's not that we have clear reason to be positive about the global economy but there may be a bit of unwinding in excessively pessimistic bets," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

While strong March data out of China had raised hopes that its economy was turning the corner, mixed data so far in April and surging debt levels in a variety of industries has fuelled doubts about whether any recovery may be sustainable.

On Tuesday, MSCI's broad gauge of global stocks climbed nearly 1.1 percent, its best session in about a month. The US S&P 500 jumped 1.3 percent, tallying its best day in two months.

The index was led by 3.4 percent gains in Amazon to a record high following a bullish analyst report and 5.3 percent rise in Allergan after the US pharmaceutical company posted strong earnings.

Notwithstanding the overnight rally in stocks, bonds remained firmly supported, indicating markets were wary about the prospects for riskier assets in the near term in an environment of sluggish global growth.

An auction of three-year US notes on Tuesday was received well while yields on 10-year debt were at 1.75 percent, not far away from a 2016 low of 1.53 percent.

Japanese debt also reflected the cautious undertone in global markets, with 10-year bonds stuck in a narrow channel around the 0.095 percent level for a while.

In the credit markets, a high yield corporate bond ETF and its investment grade ETF counterpart has risen in recent weeks indicating a growing preference for bonds.

In the currency market, the yen stayed on the defensive, following two sessions of steep declines after Japanese officials stepped up their warning about intervening to weaken the currency.

The yen was trading at 108.72 to the dollar, having slipped 3 percent from its 18-month high of 105.55 set on May 3.

The dollar got broad support from comments by a top Federal Reserve official last week, which kept alive otherwise diminishing hopes of a Fed rate hike following soft US payrolls data on Friday.

New York Fed President William Dudley said that it was reasonable to expect the US central bank would raise rates twice in 2016.

The dollar's index against a basket of six major currencies rose to a near two-week high of 94.356 on Tuesday and last stood at 94.124, having recovered 2.5 percent from its 16-month low touched Tuesday last week.

The euro traded at $1.13870, retreating further from a 2016 high of $1.16160 tested last week.

Oil prices were supported by crude supply outages in Canada, Nigeria and elsewhere. Brent crude futures dipped to $45.32 per barrel, having jumped 4 percent on Tuesday. US crude futures were at $44.51 per barrel. Both were off about 0.3 percent.