But some markets, like Indonesia, continued to fall victim to persistent domestic ills. Jakarta stocks crumbled to a one-year low, hurt by a worsening economic outlook on a falling currency, political instability and prospects of more US rate rises.

"Until we see signs of unity on the cabinet front, and therefore policy consistency and political stability, we are likely to see such volatility," said Song Seng Wun, regional economist at GK Goh Research. "For those faint of heart, they are advised to stay on the sidelines," he said. South Korean markets were rattled by news over the weekend that a top unit of the country's biggest conglomerate planned to sell assets to avoid a liquidity crunch.

Hyundai Engineering and Construction, one of Korea's major construction groups, said on Sunday it would sell $484.4 million in assets comprising 339 billion in securities and 104 billion in property by the second half of this year. The plan came after Hyundai Engineering's four creditor banks raised the ceiling on loans by 50 billion won each last week to help the company's finances. Also piling on Korea's woes was news of a current account deficit for April, the first deficit since October 1997.

Preliminary data showed Korea's current account deficit was $260 million in April, compared to a $1.66 billion dollar surplus a year earlier.

Manila shares were sharply higher, taking heart from gains in the peso and the imminent start of peace talks between the government and Moslem separatists. The benchmark index ended up nearly four per cent, putting the brakes on a slide that took it to 19-month lows last week.

Traders said the scheduled start of peace talks on Tuesday between the Philippine government and the Moro Islamic Liberation Front buoyed the market.