China's markets, closely watched after a wild ride so far this week, rallied after services sector data showed expansion, but other Asian markets remained under pressure Wednesday.

The Shanghai Composite was up 0.77 percent. The Shenzhen Composite was up 1.5 percent while the CSI300 traded up 0.69 percent.

Activity in China's services sector saw a modest expansion, though slowest in 17 months, in December, according to the Caixin non-manufacturing Purchasing Managers' Index (PMI), a measure of factory activity. The reading came in at 50.2 in December from 51.2 in November. Last week, the official services PMI reading for December was up 54.4, from November's 53.6. A reading above 50 indicates an expansion in activity on a monthly basis.

The Caixin PMI is a closely-watched gauge of nationwide activity; it focuses on smaller and medium-sized companies, filling a niche that isn't covered by the official data.

Other Asian markets stayed under pressure, retracing modest gains at the open. Australia, after a positive open, quickly slipped into the red. Markets in Japan and South Korea also opened in the green, but erased gains to trade nearly flat.

Investor focus will remain on China, following a lower finish on the bourses on Tuesday. In Monday's trading session, Chinese equities plunged after feeble manufacturing surveys and the end of a lockup on large shareholders revived concerns over the country's economic slowdown. The CSI300 dipped 7 percent in afternoon trade Monday, resulting in trade being suspended for the day.

There were reports that an unexpected decision by the People's Bank of China (PBOC) to not renew a credit line to the China Development Bank had sparked fears authorities planned to pull back on monetary easing, adding to unease in Chinese markets.

Beijing responded on Tuesday with a flurry of supportive measures, including a nearly USD 20 billion cash injection during the PBOC's open market operation and reported intervention to support the yuan and postpone the end of the lockup.

"Watch Chinese equities again today as price action has been wild and despite talk last year that the so-called 'National Team' were not going to directly intervene in the stock market, this idea seems to have reversed," said Chris Weston, chief market strategist at spreadbetter IG, in his morning note.

Weston added, "The various Chinese ETFs (FXI and ASHR) are hardly suggestive of strong gains in Chinese stocks today, but you can never tell with China and these measures can't be seen as a positive."

Before trade, the People's Bank of China fixed the dollar-yuan midpoint at 6.5314 per dollar, up 0.24 percent from the previous day's fix. On Tuesday, the fix was 0.2 percent higher than Monday. That puts the yuan at its lowest level since 2011. The yuan traded at 6.5291 against the dollar.

Hong Kong-listed shares in one of China's largest real estate developer, China Vanke, resumed trade, with shares falling 10 percent at market open. The company has been fighting a suspected hostile takeover by one of its largest shareholders. Shares had been suspended from trade since December 18 and the company's Shenzhen-listed shares still remain on a halt.

Shares of New World China, on the other hand, shot up 20.13 percent after Hong Kong-based real estate developer New World Development made another attempt to take the company private. The latter already owns 69 percent stake in the company and offered to buy the remaining shares for HKUSD 7.80 a piece, according to reports. The deal is estimated to be worth as much as HK USD 21.45 billion (USD 2.77 billion).

Oil prices were sticking point for investors on Wednesday. Prices fell in overnight trade, despite ongoing tensions between two prominent oil producers, Saudi Arabia and Iran.

The West Texas Intermediate (WTI) crude was up 19 cents at USD 36.16 a barrel while the internationally traded benchmark, Brent was up 19 cents at USD 36.61 a barrel. In US trade, futures were down over 2 percent, with Brent nearing its 11-year low of USD 35.98 a barrel, which it hit just before Christmas.

The Australian market opened in positive territory, but the ASX 200 quickly erased modest gains to fall 1.33 percent lower as energy, financials, and materials sectors all weighed on the index.

Banking stocks were firmly down, with Westpac down about 1.28 percent, among the big four. Resource plays were pressured, with Rio Tinto shares down 2.7 percent and iron ore producer Fortescue down 5.28 percent. Energy plays were down between 0.38 and 4.81 percent. Gold miner Newcrest erased early gains on the back of higher gold prices to trade down 2 percent.

Gold, seen as a safe haven in current volatile conditions, has ticked up nearly 1.4 percent since the start of 2016 to trade at USD 1,077.85 an ounce.

Elsewhere, shares of Incitec Pivot, a fertilizer company, were down 3.09 percent after the company said a freight train derailment in Queensland, Australia, right after Christmas, will wipe USD 14 million from their full-year net profit. Reports added the train was carrying more than 800,000 liters of sulfuric acid to one of its manufacturing plants.

In Japan, the Nikkei 225 opened in positive territory before erasing gains to trade 0.6 percent lower with major exporters falling. The Kospi was down 0.22 percent.

Shares of Toyota were down 1.52 percent in morning trade. The carmaker announced Tuesday afternoon it aimed to sell 1.15 million vehicles in China this year with its joint venture partners, up 2.7 percent from 2015. Reports said Toyota's sales in China fell 2.4 percent in December from a year earlier to about 122,000 vehicles.

The dollar-yen pair, which fell below the 120-benchmark on Monday, was at 119.09 in morning trade, with the Japanese currency likely boosted by safe-haven flows. A stronger yen can pressure exporters' earnings when profits are converted from other currencies.

Samsung Electronics shares traded 2.24 percent lower ahead of its fourth quarter earnings guidance expected later in the week. At the Consumer Electronics Show (CES) in Las Vegas, the electronics giant introduced a host of new products including laptops, tablets, TVs, and a new smart refrigerator. It also added new designs for its Gear S2 smartwatch line.

Major US indexes closed mixed Tuesday, after a sharply lower start to the year. The Dow Jones Industrial Average closed up 9.72 points, or 0.06 percent, at 17,158.66, while the S&P 500 closed up 4.05 points, or 0.2 percent, at 2,016.71. The Nasdaq Composite was down 11.66 points, or 0.24 percent, at 4,891.43.

The CBOE Volatility Index (VIX), a measure of implied volatility of the S&P 500 index options, traded near 19. It is widely considered the best gauge of fear in the market.

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First Published:Jan 6, 2016 7:52 AM IST