HONG KONG (MarketWatch) -- Hong Kong stocks went on a wild roller-coaster ride Thursday before ending little changed, with the session highlighting investor worries about a raging global financial crisis as well as anguish over beaten-down valuations.

In a stunning turnaround, the benchmark Hang Seng Index lost more than 1,350 points in the morning session to its lowest level in more than two years, only to claw back all of the lost ground and then some in the closing moments. The index, which lost 15.2% in the previous six sessions, finally ended 0.03% lower at 17,632.46.

The sharp recovery was aided by news that the Federal Reserve and other major central banks planned to inject hundreds of billions of dollars worth of liquidity into the financial system in a bid to thaw frozen short-term money markets. See full story.

"It's very volatile market and people have different interpretations of the government policies in the U.S. and China. But overall, I do think liquidity is still very tight in U.S. and China. There might not be too much money to prop up the markets sharply in the short term," said Y.K. Chan, strategist at Phillip Capital Management in Hong Kong.

Patrick Shum, strategist at Karl Thomson Securities, said the recovery occurred because local stocks were oversold.

The bounce was spurred by buying in market heavyweight China Mobile and Chinese banks, which staged a sharp turnaround in the afternoon. China Mobile (941) CHL, -2.18% ended 4.3% higher, after dropping more than 6% earlier in the day. Bank of Communications (3328) rose 1.8% and Ping An Insurance (Group) Co. of China (2318) climbed 2.3%, also erasing early losses.

Analysts attributed the steep sell-off earlier in the day to investors' attempts to raise cash amid tight liquidity conditions around the world.

"As the credit crunch continues to spread, institutional investors are trying to dump shares, as Hong Kong has good liquidity," said Castor Pang, a strategist at Sun Hung Kai Financial.

Rest of region

Markets elsewhere in the region ended mostly lower, though most of them also came off their respective intraday lows.

In Tokyo, the Nikkei 225 Average fell 2.2% to end at 11,489.30, its lowest level since June 2005. The broader Topix index dropped 2.1% to 1,097.68.

China's Shanghai Composite fell more than 6% during the session, before ending down 1.7% at 1,895.84.

Australia's S&P/ASX 200 dropped 2.4% to 4,607.30, while South Korea's Kospi slid 2.3% to 1,392.42, surrendering most of its gains from the previous session.

New Zealand's NZX 50 index fell 3.4%, Singapore's Straits Times index rose 0.5% by late afternoon, and Taiwan's Taiex shed 2.7%.

India's Sensitive Index, or Sensex, fell 0.2% to 13,230.69 in the afternoon, after losing more than 4% in the early minutes.

Despite the recovery toward the close, analysts expected the recent slump in global markets to continue.

Phillip Capital's Chan said he expected the Hang Seng Index to find support around the 16,000-point level.

Separately, Citigroup strategists wrote in a note that "a combination of falling asset prices, solvency fears and counterparty concerns is raising systemic risks in respect of the current financial crisis."

"De-leveraging by the consumer is likely to weigh on developed-world gross-domestic-product growth for some time. Our findings suggest the process of removing the financial excesses has only just begun," they added, referring to high levels of consumer debt.

Regional detail

Shares of Sumitomo Mitsui SMFJY (8316) dropped 6.6%, while Australia & New Zealand Banking Group (ANZ)(ANZ) ANZBY, -1.69% fell 3.4% in Sydney and 8% in Wellington.

Australian financial firms were hurt especially severely, with Macquarie Group MQBKY, -0.65% (MQG) plummeting 23% while Babcock & Brown (BNB) sank 17%.

Shares of Citic group companies were in focus in Hong Kong, after CNBC reported earlier in the day the Chinese group was in talks with Morgan Stanley for a possible deal. Shares of China Citic Bank Corp. (998) lost 4.9% in Hong Kong, but rose 6.2% in Shanghai, rebounding from steep early losses.

Other banking stocks also bounced off the day's lows in Shanghai, as bargain buyers snapped them up after they suffered heavy losses recently. Industrial & Commercial Bank of China rose 0.6% and Bank of China gained 2.7%.

Concerns that credit markets could dry up because of the crisis in the financial sector also hurt shares of real estate and property companies as well as steelmakers.

Shares of Mitsubishi Estate MITEY, -0.44% (8802) lost 6.2% in Tokyo and CapitaLand CLLDY, -0.82% shares fell 5.8% in Singapore, while Cheung Kong (Holdings) (1) CHEUY dropped 5% in Hong Kong.

Among steelmakers, Nippon Steel Corp. (5401) NISTY shed 5.2% in Tokyo and Baoshan Iron & Steel Co. dipped 2.9% in Shanghai, while shares of Posco PKX, -0.83% dropped 1.2% in Seoul.

In Asian currency trading, the U.S. dollar bought 104.78 yen, compared with 104.73 yen Wednesday.

October crude-oil futures fell 68 cents to $96.48 a barrel in electronic trading, after surging $6.01 to $97.16 a barrel Wednesday on the New York Mercantile Exchange.