UPDATE: 10:05 p.m. EST -- Hong Kong shares slumped as markets there opened for the first time this week following Lunar New Year holidays. The Hang Seng Index fell 3.7 percent, catching up in part with losses suffered in Japan and other Asian markets earlier in the week. Japan is closed for a holiday today.
Asian shares fell anew early Thursday after U.S. Federal Reserve Chair Janet Yellen acknowledged economic and financial concerns without giving more clarity on interest rates. U.S. shares gave up gains of as much as 1.5 percent to end mixed.
South Korea reopened after Lunar New Year holidays and the KOSPI dropped 2.6 percent. Singapore's STI declined 1.6 percent. Australia's ASX 200 rose 0.2 percent.
In the U.S., the Dow Jones Industrial Average fell 0.6 percent. The Standard & Poor's 500 , earlier up as much as 1.5 percent, ended little changed. The Nasdaq composite rose 0.4 percent.
Yellen testified at the U.S. Congress on Wednesday, a month after the Fed raised interest rates for the first time since the global financial crisis, underlining its confidence the U.S. recovery was sustainable. Since then, China's slowdown and oil's plunge have worsened the outlook for the global economy and roiled financial markets. While energy companies and their suppliers have led the decline, this week, banks from Europe to the U.S. dropped on concern energy companies and other borrowers would default. These have led investors and traders to bet the Fed won't raise rates four times this year starting March, as originally expected, and some were looking to Yellen to confirm that.
Yellen said monetary policy is not on a "preset course" but said both "gradual" hikes and a reversal were possible. "Financial conditions in the United States have recently become less supportive of growth," she said, while acknowledging the concerns about China, and oil and other commodities.
"Maybe she is saying the economy is slower than most of us were thinking," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, as Reuters reported.
Morgan Stanley said Yellen didn't say enough about holding back on interest rate increases to assure the market.
"Until the Fed makes clear that "gradual" could mean only one or two rate hikes in 2016 instead of three or four, or until the Fed changes the narrative away from rate hikes altogether, we think risk markets will struggle in the absence of positive catalysts," Morgan Stanley wrote in a note to clients, as CNBC reported.
European and U.S. banks recovered Wednesday amid speculation that concerns about a recesssion, bankruptcies and defaults were overblown and their stock prices cheap. Deutsche Bank, one of the biggest losers earlier this week, recovered more than 14 percent from 30-year lows.
"As long as we can avoid a recession, this correction will probably work itself out, and we'll have the opportunity to bounce back," said Kelly Bogdanov, portfolio analyst at RBC Wealth Management in San Francisco, as Reuters reported.