Trade concerns, tech stocks and dollar in focus
Japan's Nikkei 225 closed higher by 0.13 percent, or 27.26 points, at 21,319.55 amid choppy trade. The broader Topix edged up by 0.14 percent. Automakers were higher on the back of strong U.S. auto sales reported overnight, with Toyota edging up by 0.13 percent, while bank stocks came under pressure.
Elsewhere, South Korea's benchmark Kospi index lost 1.41 percent to close at 2,408.06, weighed down by declines in the technology sector as index bellwether Samsung Electronics lost 2.49 percent.
Steelmakers were also mostly lower, with Posco sliding 2.31 percent.
Blue chips posted declines ahead of the market close: Heavyweight Tencent was down 2.1 percent by 3:17 p.m. HK/SIN and HSBC slid 0.82 percent.
Mainland stock indexes also reversed early gains: The Shanghai composite slipped 0.15 percent to finish at 3,131.84 and the smaller Shenzhen composite shed 0.57 percent to close at 1,831.70.
Over in Australia, the S&P/ASX 200 inched higher by 0.17 percent to end at 5,761.40 after hovering around the flat line earlier.
MSCI's broad index of stocks in Asia Pacific excluding Japan declined 0.69 percent by 3:15 p.m. HK/SIN. That came after U.S. stocks rose in the last session on gains in technology stocks, which had fallen sharply on Monday.
China-US trade tensions
In response, China said via an embassy statement it opposed the additional tariffs proposed and that "it is only polite to reciprocate," Reuters reported. China's ambassador to the U.S. also told CNBC on Wednesday that his country would "fight back" against the latest measures.
"This trade tension story is the biggest uncertainty for China from the external perspective and the story is developing every day," Haibin Zhu, chief China economist at J.P. Morgan, told CNBC's "Squawk Box."
"Trade war, or the tariffs, are never a zero sum game. It's actually a lose-lose situation. China will probably lose more, but the U.S. will also suffer," he added.
Markets have been on edge about U.S. tariffs triggering retaliatory actions from U.S. trading partners and potentially causing a trade war that would dent global growth.
The dollar held above 106 yen, although the greenback was slightly softer compared to levels around the 106.6 handle seen in the last session. The dollar traded at 106.56 yen by 3:06 p.m. HK/SIN.
The dollar index, which tracks the greenback against six currencies, stood at 90.185.
In corporate news, Elliott Advisors, an arm of activist hedge fund Elliott Management, said it had a stake worth more than $1 billion in three affiliates of Hyundai Motor Group. Reuters reported that Elliott was pushing for corporate governance improvement.
Shares of Hyundai Motor, Hyundai Mobis and Kia Motors rose 2.96 percent, 3.52 percent and 2.52 percent, respectively.
European stocks close lower as China fires back at US amid trade war fears
China announced additional tariffs on 106 U.S. products on Wednesday, less than 24 hours after President Donald Trump unveiled charges on a list of Chinese imports. Trump revealed plans for a 25 percent tariff on some 1,300 industrial technology, transport and medical products in retaliation for what the U.S. administration alleged had been decades of state-backed intellectual property theft by Beijing.
In response, China announced a 25 percent levy on U.S. imports which includes products such as soybeans, cars and whisky.
The news prompted a flurry of European sectors to fall, with technology stocks among the worst performers — down more than 1.6 percent. Siltronic and Besi led the sectoral losses.
Looking at individual stocks, WPP was closed 2 percent lower after the advertising giant said it was investigating CEO Martin Sorrell over "an allegation of personal misconduct." WPP's board appointed an independent counsel to investigate Sorrell, the company told CNBC. The ongoing investigation doesn't appear to be material to the business, the company's statement said.
Elsewhere, Swiss Re said Wednesday that talks with SoftBank over a minority stake of no more than 10 percent in the reinsurance giant were continuing "at an early stage," according to a Reuters report. Shares of Swiss Re were more than 3.8 percent lower on the news.
Trade showdownOn Wall Street, stocks plunged at the open following China's proposed countermeasures, with the Dow Industrial Average Index falling more than 500 points. Stocks pared losses later in the day, with the Nasdaq turning positive.
What's most likely to derail the market?U.S.
Dow rallies more than 700 points from lows of the day
The Dow Jones industrial average closed 230.94 points higher at 24,264.30, rallying more than 700 points from its session low. Microsoft and IBM were the best-performing stocks in the index.
The S&P 500 erased a 1.6 percent decline to finish the session 1.2 percent higher at 2,644.69, led by gains in consumer stocks. The broad index also closed back above its 200-day moving average, a key technical level. The Nasdaq composite closed 1.5 percent higher at 7,042.11 after plunging as much as 1.9 percent.
Stocks mounted their comeback as the White House tried to push back on the notion a trade war would breakout.
Larry Kudlow, Trump's chief economic advisor, told reporters: "He wants to solve this with the least amount of pain.... this is a growth action. I can't emphasize that enough."
"We have a very emotional tape," said Jeff Kilburg, CEO of KKM Financial. "When you have so much emotion, you're going to see some volatile moves."
"The emotional tape presents investors with a buying opportunity," he said.
Apple helped lead the comeback in the market, rising 1.9 percent. Chip stocks also rebounded, with Micron and Advanced Micro Devices climbing 3.6 percent and 2.3 percent, respectively.
Automakers Ford and General Motors rose 1.6 percent and 3 percent, respectively, after falling sharply earlier on Wednesday. But Boeing — a company that can be adversely impacted by a trade war — closed 1 percent lower. Deere also pulled back 2.9 percent.
The major averages hit their session highs after Bloomberg reported President Donald Trump may soften on a key NAFTA negotiation point.
China's Ministry of Commerce said the tariffs are designed to target up to $50 billion in U.S. products annually and would hit goods like soybeans and cars. The news increased worries a trade war may be brewing between the U.S. and China.
"I think the market is just concerned about this thing escalating right now," James Paulsen, chief investment strategist at The Leuthold Group, told CNBC's "Squawk Box." "It's not so bad if we have a few tariffs on a few products, but if it escalates worldwide, … then you're really threatening the recovery globally."
Perceived safe-haven assets got a bid higher on Wednesday, but failed to hold those gains. Gold futures were up slightly in afternoon trading, while the 10-year U.S. Treasury yield rose to 2.78 percent after slipping earlier.
Trump tweeted later in the morning: "We are not in a trade war with China, that war was lost many years ago."
The Cboe Volatility index (VIX), widely considered the best gauge of fear in the market, rose to 22.08 and hit a high of 24.51.
"What we're seeing is a lot of uncertainty in the market," said Eric Aanes, president and founder of Titus Wealth Management. "We've been living in this calm world for so long we think we were due for more volatility."
Wednesday's moves come a day after the major indexes closed sharply higher as tech rebounded from steep losses seen in Monday's sessions.
In economic news, the ADP National Employment Report showed private companies added 241,000 jobs in March, more than the expected gain of 205,000.
The services purchasing managers' index (PMI) slipped to 54.0 in March from 55.9 in February. Meanwhile the non-manufacturing ISM index came in at 58.8 for last month, missing expectations.
—CNBC's Sam Meredith and Eamon Javers contributed to this report.