People are reflected in a glass while looking at electronic boards displaying stock information at the Australian Securities Exchange. Brendon Thorne | Bloomberg | Getty Images

Asia Pacific shares traded mixed on Thursday, despite strong quarterly earnings in the U.S. and after the U.K. government won a parliamentary confidence vote. Worries over China likely weighed on market sentiment. Japan's Nikkei 225 erased early gains of near 0.3 percent to close down 40.48 points, or 0.2 percent, at 20,402.27 while the Topix index added 5.43 points, or 0.35 percent, to 1,543.2. The , considered a safe-haven asset, strengthened against the dollar, trading at 108.85 at 3:03 p.m. HK/SIN, climbing from an earlier session low of 109.12. In South Korea, the Kospi also gave up early advances to close near flat. Australia's benchmark rose 14.9 points, or 0.26 percent, to 5,850.1. Markets in the Greater China region were mostly down: Hong Kong's Hang Seng Index fell about 0.5 percent in late-afternoon trade. On the Chinese mainland, the Shanghai composite index fell 0.42 percent while the Shenzhen composite and Shenzhen component indices declined around 0.9 percent each. The on-shore yuan traded at 6.7644 to the dollar. Prior to the market open, China's central bank set the yuan mid-point at 6.7592. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2 percent from the official mid-point rate it sets daily.

Concerns over China remain

On Wednesday, the PBOC pumped 560 billion yuan ($83 billion) into its banking system, which was a record amount of money injected in one day. In a statement on its website, the central bank said because it was the "peak of the tax period," total liquidity of the banking system is "declining rather quickly." Liquidity refers to the ease with which assets can be converted into cash. The move "alleviated concerns of a potential funding squeeze ahead of the Chinese New Year festive period," analysts at Singapore's OCBC Bank said in a morning note. Market sentiment has weighed in recent months over worries that the world's second-largest economy is slowing down while Beijing remains entangled in a trade spat with Washington. For its part, the Chinese government has introduced a spate of measures to prop up the economy. Participants in the market want to "see the reaction from the Chinese government, kind of acknowledging that there's a slowdown, there's risk — not only from the trade situation that we're dealing with, but also from the deleveraging," Daniel Morris, a senior investment strategist at BNP Paribas Asset Management, told CNBC's "Squawk Box" on Thursday. Morris pointed to Beijing's efforts to reduce debt in the economy as well as the size of China's shadow banking system. That, he said, inevitably had a negative impact on growth and the government is now trying to offset that. "So, it's a bit of a balance for them. On one hand, if you're deleveraging, that's negative for growth. But then we have to try to compensate for that with interest rate cuts and spending elsewhere," he said, adding that he was reasonably confident in Beijing's ability to manage the situation, given that some of trade concerns and drag from tariffs ultimately goes away.

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