The onshore yuan was little changed versus the dollar, highlighting the cautious mood as investors monitor the impact of the virus.
The safe-haven yen and Swiss franc nursed losses versus the dollar. Oil prices bounced in Asia on hopes for more output cuts from OPEC and its allies but sentiment remained weak on worries about a long-term dent in demand for energy and other commodities.
China and other countries have imposed travel restrictions to try to contain a new virus that emerged in the central Chinese city of Wuhan late last year, slamming the breaks on manufacturing and tourism in the world's second-largest economy.
Many investors argue that any slowdown will be temporary and that Chinese policy steps are reason to remain optimistic about the growth outlook, but so far public health officials have not found a way to stop the spread of the virus both inside and outside of China.
"We're going to have a strong day in Asia, but whether this is the reversal of a downtrend remains to be seen," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
"Oil investors remain pessimistic about demand disruptions, but equity investors, especially overseas, are discounting the impact of the virus."
Australian shares were up 0.37%, buoyed by gains in the mining sector. Japan's Nikkei stock index rose 0.99%, supported by shares of industrial equipment makers.
U.S. stock futures ESc1 fell 0.23% in Asia on Wednesday. The S&P 500 rose 1.5% on Tuesday and the tech-heavy Nasdaq rose to a record high.
The People's Bank of China (PBOC) is likely to lower its key lending rate - the loan prime rate - on Feb. 20, and cut banks' reserve requirement ratios in the coming weeks, policy sources told Reuters.
The PBOC has already pumped hundreds of billions of dollars into the financial system this week. This helped Chinese stocks stabilise on Tuesday following a rout that wiped out around $700 billion in market capitalisation on Monday when Chinese markets opened after an extended holiday.
The virus has already claimed nearly 500 lives. Japan's health minister said on Wednesday 10 people on a cruise ship at the port of Yokohama have tested positive for the new virus.
In the onshore market, the yuan held steady at 6.9970 per dollar after rising 0.3% on Tuesday.
The yen traded at 109.48 per dollar, close to the lowest in almost a week. The Swiss franc held steady at 0.9696 versus the dollar following a 0.3% decline on Tuesday.
Benchmark 10-year Treasury yields edged up to 1.6026% in a sign of receding concern about the coronavirus.
U.S. crude CLc1 ticked up 1.27% to $50.24 a barrel, and Brent crude LCOc1 rose to 0.74% to $54.63 per barrel in recovery from declines on Tuesday.
OPEC and its allies are considering cutting oil output by a further 500,000 barrels per day (bpd) due to the impact on oil demand from the coronavirus, sources tell Reuters.
Brent futures have lost around 16% since China confirmed on Jan. 21 that human-to-human infection of the previously unknown virus is possible, which kicked of a rout in global markets as the number of cases and the death toll rose.
(Reporting by Stanley White; editing by Richard Pullin and Sam Holmes) ((email@example.com; +81 (0)3 4563 2799; twitter.com/stanleywhite1 ;))
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