Asian stock markets staged a modest bounce on Wednesday from the ten-month lows hit in the previous session although the underlying mood was cautious as investors remained wary about Europe’s sovereign debt crisis.

Seoul staged a late rally as bargain-hunters picked up carmakers and technology stocks – although fears about heightened tensions with North Korea limited gains. The Kospi rose 1.4 per cent to 1,582.12.

“We see a risk that geopolitical tensions on the Korean peninsula will cause lingering market concerns this time around, compared to the generally short-lived market reactions to previous episodes,” said Alastair Newton at Nomura International.

“As a result, we expect South Korean policymakers to do “whatever it takes” to calm market volatility. We judge that geopolitical risks are well priced in many South Korean asset classes.”

Samsung Electronics added 1.2 per cent to Won750,000, Hynix Semiconductor rose 3.8 per cent toWon24,700 and Kia Motors leapt 8.2 per cent to Won30,300.

Mando, the car parts maker, extended its post-flotation rally by a further 3.1 per cent to Won115,000 - marking a rise of nearly 39 per cent from its debut last week.

Most other markets in the region had a similarly positive bias. In Singapore, the Straits Times index rose 1.7 per cent to 2,696.02, Taipei’s weighted index added 1.1 per cent 7,167.35. and the BSE 30 in Mumbai climbed 2.3 per cent to 16,387.84.

In Jakarta, the composite index jumped 7.3 per cent to 2,696.78, its biggest one-day rise in 18 months.

Bumi Resources soared 20 per cent to Rp2,050 after a court ruled against a tax probe into one of the coalminer’s units. The tax office said it would continue its investigation.

Astra International rose 10 per cent to Rp40,050 after the vehicle distributor forecast record 2010 car sales.

Tokyo saw a more muted rally as fears about the eurozone’s economic outlook persisted. The Nikkei 225 Average rose 0.7 per cent to 9,522.66, after closing at its lowest for nearly six months on Tuesday. The broader Topix index fell 0.1 per cent to 859.00.

Exporters regained some ground as bargain-hunters moved in, although concerns about the recent strength of the yen remained. Olympus rose 2.2 per cent to Y2,285, chipmaker Advantest gained 2.8 per cent to Y2,014 and Tokyo Electron added 3 per cent to Y5,220.

Shipping groups advanced after the Baltic Dry index, which tracks commodity freight rates, reached its highest level in six months. Nippon Yusen rose 3.2 per cent to Y322 and Mitsui OSK Lines jumped 5 per cent to Y630.

Hong Kong moved higher in relatively quiet trading as investors took advantage of valuations that had fallen to their lowest level in more than a year. The Hang Seng index rose 1.1 per cent to 19,196.45.

Chinese insurance companies rose on reports that they would be allowed to invest in companies listed on Hong Kong’s main board.

Ping An climbed 5 per cent to HK$60.60 and China Life gained 1.1 per cent to HK$32.90.

Gains for the insurance sector’s mainland listings, plus strength in commodity-linked stocks, helped Shanghai inch higher, although turnover eased to the second lowest in two months. The Composite index rose 0.1 per cent to 2,625.79.

In Australia, the S&P/ASX 200 index rose 1 per cent to 4,307.2, with Rio Tinto up 3.7 per cent at A$63.95 after it predicted that strong demand for iron ore would continue.

Copyright The Financial Times Limited 2018. All rights reserved.

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