Tokyo's key Nikkei average ended little changed after battling back from a drop of more than one per cent as the steep overnight slide on Wall Street dampened shares in Japanese global companies, brokers said.

Fears about Asia's financial crisis, weaker corporate earnings for US firms and a slowing American economy had pulled down the Dow Jones industrial average by 299.43 points or 3.41 per cent to 8,487.31 on Tuesday.

The sell-off continued as soon as opening bells sounded in Asia, with share indices in Tokyo, Hong Kong, Sydney, Kuala Lumpur, Seoul, Taipei, and Wellington suffering losses in excess of one per cent.

Unlike other markets, however, Tokyo regained its poise thanks to a rally in banking stocks and a flood of public pension buying. The rebound wassparked by growing expectations of comprehensive tax cuts aimed at stimulating the sluggish economy.

Finance minister Kiichi Miyazawa said on Tuesday that the top income tax rate would be cut to 50 per cent from 65 per cent, the latest detail to emerge on a programme of tax cuts expected to total nearly $50 billion.

The benchmark Nikkei average closed off 31.42 points, or 0.20 per cent, at 15,992.16.

South Korea's market was the region's biggest loser, ending 3.11 per cent lower at 322.83 on jitters caused by the troubles on Wall Street.

Malaysian shares were 1.63 per cent lower, Singapore stocks lost 0.95 per cent, Taiwan ended down 1.23 per cent, and Thai shares were 2.93 per cent lower.

The beleaguered yen, however, rose as high as 143.38 to the dollar after a news report quoted senior finance ministry official Haruhiko Kuroda as saying the yen's excessive weakness has yet to be corrected.

The yen shed some of those gains in mid-morning Tokyo trade on bargain-hunting but at 0700 GMT the yen wasat 143.77, still stronger than 144.80/90 in New York late on Tuesday.

"The dollar rallied nearly five yen over the last five days or so. So a correction had been widely expected," said a dealer at a bank.

The yen's gain also boosted the Australian and Taiwan dollars and the Korea won.

Hong Kong stocks tumbled to near year lows in the wake of the Wall Street plunge.

The battered blue chip Hang Seng index was at 7425.46 in early afternoon trading, down two per cent. It had earlier fallen to 7,366.44 points, just off its year low of 7,351.68.

Worries of a further fall on Wall Street will keep Asian investors on edge, analysts said.

"Certainly if there is a further correction in the United States, then in the short- term it will be negative," said head of research Robert Sassoon at SG Securities.In Australia, early US-inspired losses deepened after Asian markets slumped. The benchmark All Ordinaries index shed 42.1 points or 1.57 per cent to 2,640.2.

"We had expected it to be off by 40 to 50 points,but it has come off further now and that is largely because Japan has come off some way," said a Sydney-based dealer of an American investment bank.