Asian markets are struggling to shake off a global selloff, despite a bounce in China shares at the end of last week.
The Nikkei Stock Average traded down 1.1%, Australia's S&P/ASX 200 was down 1.3% and South Korea's Kospi lost 0.6% early Monday. Currencies in the region recovered from multiyear lows last week but traded roughly flat.
The additional losses in shares come after U.S. stocks steadied Friday, after a week of wild swings. At the center of a global selloff in stocks, commodities and emerging market currencies is the worry that China's economic slowdown is worse than expected, possibly signaled by Beijing's surprise devaluation of the yuan earlier this month.
While volatility has eased, uncertainty remains as to whether the U.S. will be able to raise interests this September as many had expected. During an economic symposium over the weekend, Stanley Fischer, the U.S. Federal Reserve's No. 2 official, said the central bank hasn't settled on whether to raise interest rates next month.
Angus Nicholson, a market analyst at IG in Melbourne, said while the Australian stock market easily recouped almost half of this month's decline in the last four days, regaining the rest looks likely to be increasingly difficult. Global concerns over China's growth and uncertainty over the U.S. Federal Reserve's call on rates, along with a still disappointing outlook for commodity prices, is likely to weigh on further gains, he said.
China's markets are headed for a three-day trading week, due to holidays Thursday and Friday to celebrate the 70th anniversary of the end of World War II.
Over the weekend, Chinese lawmakers placed a 16 trillion yuan ($2.5 trillion) cap on local government debt. The Standing Committee of China's National People's Congress imposed a 600 billion yuan limit on the direct debt local governments are allowed to run up this year, the official Xinhua News Agency said late Saturday. That would be on top of 15.4 trillion yuan of debt owed by local governments as of the end of 2014, Xinhua said.
"The news should be a good thing for shares in the medium term," said Jacky Zhang, market analyst at BOC International. "It's essentially a way for China to push back on its debt."
Chinese stocks surged roughly 10% Thursday and Friday amid suspected government buying.
The moves weren't enough to push up Hong Kong's Hang Seng Index, which finished down 1% on Friday, even as most other markets in the region recovered. The Hang Seng's 12% loss month to date puts it on track for its worst monthly performance since September 2011.
In Japan, data this morning showed Japanese industrial production falling 0.6% in July from the previous month, the Ministry of Economy, Trade and Industry said Monday, as the nation's economy continues to follow a zigzag path amid global uncertainty. The result was weaker than a 0.1% decline expected by economists in a survey conducted by The Wall Street Journal and the Nikkei.
Currency markets continued to show signs of nervousness. The Japanese yen, which has become a safe-haven asset for investors amid recent volatility, strengthened 0.3% to 121.35 against the U.S. dollar from late Friday in Asia. The yen traded as strong as 116.46 against the U.S. dollar last week.
The Korean won weakened 0.3% to 1181.40 against the U.S. dollar from late Friday in Asia. It hit a four-year low of 1207.37 last week.
But the Australian dollar strengthened 0.5% to $0.7139 from late Friday in Asia. And the Thai baht and Singaporean dollar were roughly flat against the U.S. dollar. The baht hit a six-year low of 35.91 against the U.S. dollar during Asian trade Friday.
Kosaku Narioka and Carlos Tejada contributed to this article.
Write to Chao Deng at Chao.Deng@wsj.com