The Hang Seng finished sharply lower on Tuesday following losses from the casinos, financials and oil and insurance stocks.
Recent losses - the index is down almost 22 percent from a recent high in January - appear to have fueled concern among Chinese authorities.
Wall Street provided a positive lead but the day began with another selling frenzy that saw Hong Kong plunge more than three percent at one point before bargain-buying provided a small bounce.
An investor looks at stock market information at an exchange hall in Fuyang, Anhui Province of China.
China's central bank moved to calm jittery financial markets yesterday after the yuan fell through the psychologically significant 6.7 to the United States dollar mark, hitting its lowest in nearly a year as anxieties over U.S. trade frictions deepened.
Shanghai shed 0.2 percent and Singapore lost 0.5 percent, while Tokyo ended the morning marginally lower after fluctuating through the morning.
MSCI's broad index of shares in Asia Pacific excluding Japan edged down by 0.69 percent, but it remained above the nine-month lows it touched last week. Many people considered it just noise. "I think this will continue at least until the July 6 deadline".
Uncertainty on trade policy, most recently related to foreign investment in USA technologies, as well as concerns that retaliation could intensify to the point that global economic growth is negatively affected, have weighed on investor sentiment in recent weeks.
The yuan was trading at 6.7100 per dollar at 0149 GMT.
DBS' chief economist Taimur Baig said that while it may still be unlikely, it was time to consider the global implications of a full-blown trade war.
Qi Gao, emerging market Asia currency strategist at Scotiabank, said that while the yuan may consolidate at its current level before July 6, it will remain susceptible to the headlines and is unlikely to rebound markedly. As of Friday, the Shanghai composite was down 13.9 percent, on track for its worst year since 2011 when the index tumbled more than 20 percent. It has weakened by 2.4 percent against the dollar since the beginning of this year. The Chinese benchmark index finished the Monday session down more than 22 percent from its 52-week high of 3,587.03.
USD/CNY holds below Friday's high of 6.6390.
The dollar was down 0.2 percent to the yen at 111.35 while the euro traded up 0.1 percent at $1.1665 against the euro. Then spilt lower after Saudi Arabia said it's prepared to use its spare production capacity, estimated at 2million barrels per day, to balance the global oil market and all but confirming President Trump's weekend tweets that he asked Saudi Arabia to increase oil production.