Hong Kong shares ended 0.19 percent lower Tuesday after a late sell-off, despite a broad regional rebound from the previous day's losses that were sparked by concerns over Cyprus.
The benchmark Hang Seng Index fell 41.50 points to 22,041.86 on turnover of HK$68.32 billion ($8.82 billion).
Investors have been spooked by Nicosia's plan to impose a levy on all depositors in order to qualify for a 10 billion euro ($13 billion) bailout for Cyprus.
Savers with up to 100,000 euros would be taxed at 6.75 percent, while those with larger accounts would be forced to pay up to 9.9 percent.
The news fuelled fears the eurozone debt crisis could flare up again, while others fretted similar measures could be introduced in other troubled economies in the future.
However, Cyprus baulked at putting the bailout to a vote in parliament as the crippling terms sparked a public outcry, while the eurozone told lawmakers to drop the levy on the smaller savings, restoring some calm to markets.
Blue chips rose on bargain hunting. China's largest personal-computer maker Lenovo jumped 2.8 percent to HK$7.73 to snap a six-session losing streak.
Most China banks, insurers and property stocks continued to trade lower, as worries over China's economic growth persisted.
Bank of China fell 0.6 percent to HK$3.47, Ping An slid 1.5 percent to HK$59.55, and Internet giant Tencent slipped 1.5 percent to HK$259.20 ahead of its 2012 results expected Wednesday.
Chinese shares closed up 0.78 percent. The benchmark Shanghai Composite Index rose 17.41 points to 2,257.43 on turnover of 75.5 billion yuan ($12.1 billion).
However, analysts said the gains were limited by worries over possible government moves to further cool the property sector.
"There's still uncertainty as to policies Beijing will roll out and investors continue to cautiously monitor the property sector," Capital Securities analyst Zhang Yuheng told Dow Jones Newswires.
Property developers were mixed despite official data Monday showing more cities recorded home price increases in February than in January.
Poly Real Estate jumped 4.0 percent to 11.19 yuan but Beijing Homyear Real Estate fell 0.82 percent to 4.81 yuan.
Financial stocks rose on bargain hunting. Industrial Securities gained 4.99 percent to 12.00 yuan and Ping An Insurance rose 2.36 percent to 41.59 yuan, while cement producers gained on hopes for improved demand. Zhejiang Jianfeng Group surged by its 10 percent daily limit to 11.40 yuan.