Asian stocks clawed back early losses on Wednesday but remained wary of a possible U.S. rate rise next week, although the dollar stayed weak as forex traders remained sceptical that the Federal Reserve will act.
Australia's central bank raised its key interest rate to 6.0 percent as expected -- its highest level in more than 5 years -- and markets braced for further tightening this year.
Oil climbed half a dollar to around $75.40 a barrel on the mounting conflict in the Middle East and expected drops in U.S. oil stocks. Along with the dollar's weakness, firmer oil helped lift gold to two-week highs near $650 an ounce.
Tokyo's benchmark Nikkei average ended up 0.15 percent at 15,464.29, having fallen as much as 1 percent in morning trade, while MSCI's index of non-Japan Asian shares was flat at 0600 GMT.
Share prices closed slightly higher, recovering from morning losses, as investors took heart from some upbeat June quarter results from a number of companies, dealers said.
At the same time they were loathe to buy aggressively ahead of the release of US job data on Friday and next Tuesday's Federal Open Market Committee meeting.
Prices initially slipped back following an overnight retreat on Wall Street but they moved back into positive territory in the afternoon as investors digested some positive corporate numbers.
The Nikkei 225 Stock Average closed up 23.38 points or 0.15 pct at 15,464.29, after moving between 15,287.81 and 15,466.07.
The TOPIX index of all first-section issues rose 2.64 points or 0.2 pct to 1,569.65. The index moved between 1,553.24 and 1,569.68.
Volume was little changed at 1.48 bln shares, against 1.49 bln yesterday.
"There are still some worries about higher U.S. interest rates," said Takashi Ushio, head of the investment strategy division at Marusan Securities. "But this is very much a market where investors are searching for bargains."
Core U.S. consumer prices rose an annual 2.4 percent in June, the biggest rise in nearly four years, keeping equity markets on edge that the Fed might raise rates at next Tuesday's meeting. That helped knock U.S. stocks lower, with the Dow Jones industrial average falling 0.54 percent and the Nasdaq Composite Index losing 1.41 percent on Tuesday.
"Most people had believed the Fed would not raise interest rates in August, but yesterday's data erased those hopes," said Cho Seong-joon, an analyst at Meritz Securities in Seoul.
"Before the Fed meeting we are going to see a lot of confusion."But while equity markets readied for a U.S. rate rise, forex markets were yet to be convinced. The dollar stayed near a 3-week low against the yen and at a near-one-month low on the euro.
Around 0600 GMT, the dollar stood at 114.35 yen, down slightly from levels in late U.S. trading. The euro was little changed at $1.2820