Concerns about Greece's plans to renegotiate its bailout rattled most Asian markets on Thursday and put pressure on the euro, but Shanghai and Hong Kong rallied after China cut the amount of funds banks must hold in reserve.
Traders mostly took their cue from New York, which was hit by news that the European Central Bank would not allow Greek lenders to use government bonds to borrow cash, cutting off much needed access to liquidity.
Tokyo tumbled 1.00 percent despite a surge of more than 10 percent in Sony, while Sydney, which has risen for the past 10 sessions, was 0.15 percent higher. Seoul shed 0.76 percent and Taipei lost 0.32 percent, while Singapore dipped 0.50 percent.
However, Shanghai surged 2.45 percent and Hong Kong added 1.01 percent.
Under the terms of its bailout Greece's banks had been given a waiver to use government bonds -- which have a junk rating -- as collateral as long as Athens stuck to its obligations. The anti-austerity Syriza party last month won a general election on a promise to renegotiate the terms of its debt repayments.
The announcement came hours after new Greek Finance Minister Yanis Varoufakis held talks with ECB chief Mario Draghi, in his latest stop during a Europe-wide charm offensive looking to drum up support for a new deal.
It also comes as Varoufakis prepares to meet his German counterpart Wolfgang Schaeuble Thursday. The meeting will be closely monitored as Germany, the eurozone's main paymaster, is the strongest opponent of any easing in the bailout terms.
However, Athens said the move will have "no adverse impact" on its financial sector, saying it would be "fully protected", with other liquidity channels still available.
Nevertheless, traders were spooked. The Dow, which had surged during the day, ended flat, while the S&P 500 fell 0.42 percent and the Nasdaq lost 0.23 percent.
The euro ended Wednesday at $1.1334 and 132.81 yen in New York, from $1.1470 and 135.00 yen earlier in Asia.
On Thursday in Tokyo the single currency bought $1.1335 and 132.80 yen.
The dollar was 117.30 yen on Thursday against 117.18 yen.
Shanghai and Hong Kong surged after the People's Bank of China on Wednesday cut the percentage of cash lenders must keep in reserve to kickstart the mainland economy. It was the first across-the-board cut since May 2012.
Official data last week showed the economy in 2014 grew at its slowest pace in 24 years, while two separate gauges indicated manufacturing activity shrank in January.
It is also the latest move by authorities to juice the economy after the bank in November unveiled a surprise cut in interest rates.
"This is very positive for the stock market," Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Asia Ltd., told Bloomberg News.
"We should see a continuation of interest rate and reserve-ratio cuts in the next six to 12 months. Financials and cyclical sectors will benefit the most."
On oil markets US benchmark West Texas Intermediate for March delivery was up 51 cents at $48.96 a barrel in morning trade, and Brent crude for March gained 76 cents at $54.92.
Gold fetched $1,267.80 an ounce, against $1,267.80 on Wednesday.