Japan's Nikkei stock average slipped 0.8 percent on Tuesday, dragged lower by Canon and other exporters amid growing worry about a spreading credit crisis and gloom over the global economy. Mitsubishi UFJ Financial Group and other banks slipped after their U.S. peers slid on growing worries about the health of the U.S. financial sector.

The benchmark Nikkei shed 99.95 points to 12,778.71. It had earlier fallen well over 1% but pared losses on short-covering after the downside proved solid around 12,650. The broader Topix slid 0.8% to 1,229.35... Hong Kong shares closed flat but well off their early lows on Tuesday, as investors bought select stocks including top insurer China Life, encouraged by their forecast-beating first half earnings. The benchmark Hang Seng Index unofficially closed down 18.68 points at 21,086.11 after dropping to 20,785.80 earlier.

The Sensex opened with a negative gap of 112 points at 14,338 on the back of weak cues from the global markets. Buying in technology stocks, however, stemmed the downmove. The index touched a low of 14,286 and thereafter exhibited steady movement for most part of the trading day. Fresh buying in select auto and banking stocks in late noon trades helped the index recoup its losses and rebound into the positive zone. The Sensex touched a high of 14,495, and finally ended (provisional) with a gain of 43 points at 14,493.