Chinese stocks see-sawed in skittish trade on Thursday, as the central bank reaffirmed loose monetary policy, while other Asian markets regained enough poise after the previous day's shakeout to edge back to 2009 highs.

In Europe, Germany's Dax <.GDAXI>, Britain's <.FTSE> and France's CAC-40 <.FCHI> were set to rise about 1 percent with a raft of earnings due.

In a choppy trading day for Asia, the MSCI index of Asia-Pacific shares excluding Japan <.MIAPJ0000PUS> rose 0.4 percent, inching back toward 10-months highs after a sharp drop on Wednesday in the wake of a 5 percent sell-off in Shanghai.

Worries that China might be ready to hit the brakes on lending, a move that could curb demand and hinder a global economic recovery, had spooked Shanghai shares and sent commodity prices and energy and raw materials stocks down.

But on Thursday, China's central bank pledged to maintain loose monetary policy and use market tools, rather than quota controls, to ensure sustainable credit growth, in a statement analysts said aimed to calm volatile markets.

By 0630 GMT (2.30 a.m. ET), the Shanghai Composite Index <.SSEC> had bounced 0.7 percent but was still below Wednesday's 14-month high.

There's a need for a correction in the short-term, but it's hard to say the long-term upward trend of the market has been reversed, said Huang Yan, a fund manager at Guotai Fund Management Co. Valuations are already expensive but liquidity remains excessive, so it's a gamble.

Japanese and Australian shares were less volatile. Tokyo's Nikkei average <.N225> gained 0.5 percent to hit its highest close in nine months, lifted by a surge in Honda Motor <7267.T> and Nissan Motor <7201.T> on surprise quarterly profits.

Sony Corp <6758.T> rose 6.8 percent before posting a quarterly operating loss after the close.

Australian stocks <.AXJO> rose 1.2 percent to their highest finish in 8- months, powered by the top banks after a broker upgraded them. Lender National Australia Bank Ltd climbed 3 percent.

Miner BHP Billiton fell , but less than traders had expected after the previous day's drop in oil and metals prices, and Rio Tinto rose.

Seoul shares <.KS11> also firmed 0.7 percent, with key blue chips including Samsung Electronics <005930.KS> and steel-maker POSCO <005490.KS> leading gains.

In New Zealand, the central bank threatened to cut interest rates further because the strong currency was putting economic recovery at risk. The New Zealand dollar, which has risen 30 percent since March, dropped a cent after the central bank news but firmed to $0.6520 later.

South Korea too reaffirmed it would maintain expansionary economic policy until the private sector revived and warned a premature shift in policy to tightening mode could cause problems.

Concern about China also made waves in the forex market, where the dollar had risen on Wednesday as investors took profits on currencies which have benefited from improving investor confidence that the global economy has hit bottom.

The greenback fell against a basket of currencies <.DXY> on Thursday after the comments from China's central bank eased market worries about the Asian giant's growth.

The yen, another currency that benefits when investors turn defensive, held steady at 95.02 yen per dollar but lost some of the previous day's gains against the euro and Australian dollar.

Gold steadied, holding above a two-week low hit on Wednesday, with spot gold changing hands at $930.30 an ounce.

Crude futures hovered at $63 a barrel, after a drop of 5.8 percent on Wednesday when data from the United States, the world's top oil consumer, showed an unexpectedly large build in crude oil stocks last week.

U.S. Treasury debt prices edged lower with investors cautious ahead of a $28 billion seven-year debt sale later in the day, after a second poor auction this week heightened supply concerns.

(Additional reporting by Elaine Lies, Satomi Noguchi and Chikako Mogi in Tokyo, Jungyoun Park in Seoul and Sonali Paul in Sydney; Editing by Neil Fullick)