But gold soared to a six-year high and benchmark government debt from Germany to the United States was in high demand as money still headed towards safe-haven assets.
Even as relative calm returns, bond markets in particular have benefited from fears the trade war could spark a global slowdown and bolster the case for looser monetary policy.
U.S. shares had gained overnight after President Donald Trump downplayed worries of a lengthy trade war and senior adviser Larry Kudlow said Trump's administration is planning to host a Chinese delegation for talks in September. Wall Street futures gauges also rose.
The U.S. administration's remarks marked a shift in tone from recent days, when Beijing warned that Washington's labelling China as a currency manipulator on Monday would have severe consequences for the global financial order.
Still, market players voiced caution. Trump's threat to impose additional tariffs on more Chinese products is set to take effect in less than a month.
"There is some cautious buying creeping back in," said Michael Hewson, chief market strategist at CMC Markets. "But if you want that to be sustained you have to look towards September 1, when the new tariffs kick in, and whether or not Trump presses ahead with them."
MSCI's broadest index of Asia-Pacific shares outside Japan was slightly lower.
Also easing the mood were signs that China is intervening to steady the yuan after its recent sharp fall, soothing investor fears of a global currency war.
The U.S. Treasury designated China a currency manipulator on Monday after it allowed the yuan to weaken below 7 per dollar for the first time in over a decade. The U.S. move rattled financial markets and dimmed hopes the trade war was ending.
Since then, China's state banks have been active in the onshore yuan forwards market, tightening dollar supply and supporting the Chinese currency, sources told Reuters.
Despite that support, the yuan still dropped 0.2% to 7.0708 in offshore markets, with currency markets still on edge after the People's Bank of China (PBOC) set its official reference rate at an 11-year low.
"We had a little bit of recovery yesterday, but this morning we are seeing that stalling due to the PBOC fixing the dollar-yen higher again," said Thu Lan Nguyen, FX strategist at Commerzbank.
SAFE HAVENS IN DEMAND
The skittish mood was underlined by continuing demand for currencies and commodities considered safe havens.
Gold touched a six-year high of $1,489.76 per ounce. The Japanese yen rose 0.2% to 106.26, although that was still some way from levels seen on Monday when the trade war's escalation panicked investors.
The rush to the yen was also fuelled by a 2% slump in the New Zealand dollar after its central bank made an aggressive interest rate cut and said negative rates were possible, promoting bets on further policy easing around the world..
Central banks across the world, looking to rev up growth and fight low inflation rates, have turned increasingly dovish in recent months.
But the extent of the Reserve Bank of New Zealand's move caught markets off-guard, sending the Kiwi currency to its lowest level since early 2016 and dragging the Australian dollar down 0.4% to $0.6378.
U.S. bonds stood tall, retaining much of their gains made in the past week. Ten-year Treasury notes yielded 1.66% percent, their lowest since 2016, as investors bet on another rate cut by the Federal Reserve in September.
Germany's 10-year bond yield fell to record lows deep in negative territory as the bigger-than-expected Kiwi interest rate cut and weak German economic data fuelled further a rally in bond markets.
German industrial output fell more than expected in June, adding to signs that Europe's biggest economy contracted in the second quarter as its exporters were caught up in trade disputes.
In commodity markets, oil prices slipped to near seven-month lows, with the potential for damage to the global economy and to dampen demand from the Sino-U.S. trade dispute casting a shadow over the market.
International benchmark Brent crude futures were at $58.65 a barrel by 1107 GMT, down 19 cents, or 0.5%.
(Reporting by Tom Wilson; Editing by Catherine Evans) ((T.Wilson@thomsonreuters.com; 44-20-7542-4531; Reuters Messaging: email@example.com))