Asian shares were mixed on Thursday after a sharp fall in mainland Chinese shares rekindled worries about the health of China's economy, while investors awaited word from the European Central Bank on its plans regarding additional stimulus.

MSCI's broadest index of Asia-Pacific shares outside Japan , and Japan's Nikkei pared earlier losses, to hold steady at 0247 GMT.

Wall Street stocks lost momentum overnight, with the S&P 500 losing 0.6 per cent despite earlier gains, failing to extend a rally since late last month beyond its 100-day moving average.

The dollar held steady against a basket of six currencies at 119.90, and versus the yen at 119.88 yen.

"The most notable influence on markets recently has been the quarterly reporting in the U.S, which has shown a softening of outcomes relative to expectations," said Angus Gluskie, managing director of White Funds Management in Sydney.

"Investors remain cautious on the Chinese outlook notwithstanding the uptick in a small number of indicators," he said.

The Shanghai Composite stock index slumped 3 per cent on Wednesday, its worst daily performance in five weeks after a relatively calm month, reminding investors that China's markets and economy are still far from stable.

The Shanghai index, which slipped in early trade, was little changed, while the CSI 300 index gained 0.3 per cent. The Hang Seng index dropped 0.7 per cent.

Chinese stocks' renewed weakness has put fresh pressure on commodity-linked currencies and emerging market currencies.

Emerging market currencies from the Malaysian ringgit to the Chilean peso stepped back from recent highs.

The recovery in many share markets since last month has in fact been partly supported by hopes policymakers around the world may take steps to bolster their respective economies.

Those hopes will be tested in an event-packed period towards the end of the month that starts with the European Central Bank's policy meeting on Thursday.

ECB President Mario Draghi is widely expected to keep the door open for more monetary stimulus in the face of deflation risks, but is seen stopping short of taking new policy steps at Thursday's meeting.

That meeting will be followed next week by central bank policy meetings in the US and Japan, as well as four-day leadership meeting of China's Communist party.

"I think the rebound in markets is coming to an end. From now, markets will be looking to policy events later this month as well as corporate earnings," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

The euro stood at $1.1342, barely moving this week ahead of the ECB's meeting.

The Australian dollar recovered to $0.7226 after tumbling to $0.7202 on Wednesday, its lowest in a week. The Canadian dollar fell to C$1.3149 per US dollar on Thursday, its lowest in 2 1/2 weeks, as the Canadian central bank lowered its growth forecasts for 2016 and 2017. It has since recovered to C$1.3112.

Oil prices fell to three-week lows as the US government reported a bigger than expected build-up in crude oil stockpiles.

Brent futures dropped to a three-week low of $47.50 per barrel on Wednesday and last stood at $48.07.

US crude futures settled at $45.55 a barrel, after slumping to $44.86 a barrel, the lowest since Oct. 2, in earlier trade.

US natural gas futures fell to a three-year low of $2.379 per million British thermal units on Wednesday on forecasts for warmer weather over the next two weeks. They were last trading at $2.396. – Reuters