Chinese shares clawed back up on Thursday after a two-week sell-off, giving a boost to Asian stock indexes and commodities, but many investors were nervous that the Shanghai slide may have more room to run.

The benchmark Shanghai Composite Index <.SSEC> was up 1.5 percent, helped by reports that the stock regulator had approved new mutual funds this week to help underpin the market that has slid nearly 20 percent since hitting a 14-month high earlier in the month. <.SS>

But Chinese shares surrendered some gains after jumping nearly 3 percent at one point, showing that the market remains highly volatile.

The gains helped give a lift to other regional shares that have been battered by sudden slumps in Shanghai this month.

Japan's Nikkei average <.N225> was up 0.7 percent, while the MSCI benchmark of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> gained 1 percent.

Shanghai's impact on global markets has surprised analysts but has been taken by some as a worrying sign about the outlook for the Chinese economy, which has been among the strongest to power out of the worst global downturn in decades.

Patrick Bennett, Asia FX and rates strategist at Societe Generale, said the fact that Chinese shares were having such a big influence on other markets felt like intellectual piracy, but showed how edgy investors are on the global outlook.

That such is occurring does tell us of the fragility of risk sentiment, Bennett said in a note to clients.

Gains in higher-yielding currencies were limited on worries that the volatile Chinese market, which is still up 55 percent so far this year, was suffering a sharp bout of profit-taking that would resume before long.

The Australian dollar was steady at $0.8295 despite the broad gains in stocks after having taken a hit from the sharp drop in Shanghai shares.

The U.S. dollar edged up after sliding the previous day. The dollar index, a gauge of the greenback's performance against six major currencies, was up 0.2 percent at 78.589 <.DXY>.

Oil prices dipped 21 cents a barrel to $72.21 after having surged more than 4 percent on Wednesday on data showing a sharp plunge in U.S. crude stockpiles, a jump that spilled over into shares of energy companies and helped push the Dow Jones industrial average up 0.7 percent.

Shares of Japanese oil and gas field developer Inpex <1605.T> were up 2.4 percent.

Safe-haven government bonds slipped as stocks attempted to stage a recovery.

Japanese government bond futures dipped 0.08 point to 138.79 after having pushed up to a five-month high in early trade. The five-year JGB yield edged up a basis point to 0.6550 percent after touching a four-year low the previous day.

(Editing by Kim Coghill)