Tokyo - Asian shares rose on bargain hunting on Tuesday but the euro eased, reflecting investor nervousness as a surge in Spanish borrowing costs added to simmering worries about Europe's debt restructuring challenges.
European shares were also likely to rise, with spreadbetters predicting major European markets would open as much as 0.5% higher. US stock futures were up 0.8%.
The euro was sluggish, inching down 0.1% to $1.2535, just above its 2-month low of $1.2495 hit on Friday, while the Australian dollar, often seen as a gauge for risk appetite, steadied at $0.9850 as shares advanced.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.2%, after having eased as much as 0.3% earlier, and crawled away from its lowest level since late December touched on Friday.
Japan's Nikkei average also erased early losses to add 0.5%.
Investors likely facing months of uncertainty in the eurozone debt crisis looked for local factors in regional markets as a reason to buy.
Australian shares jumped 1%, recovering from early losses as bargain hunters snapped up beaten-down resource stocks after a month of losses, while Taiwanese shares outperformed Asian peers, surging nearly 3% on a proposal to relax a planned capital-gains tax.
Chinese shares rose also as investors bought into sectors seen as benefiting from China's push to avert a sharp slowdown.
"I doubt anybody is expecting Europe to resolve anytime soon, so China's ongoing stimulus effort is becoming an easy trade for investors," said Edward Huang, Haitong International Securities' equity strategist.
Banks in troubled eurozone economies such as Greece and Spain appear to be seeing their deposits flee to German or Swiss banks, a move that could potentially trigger a fresh crisis if those vulnerable banks face liquidity shortages, said Tetsuro Ii, president of Commons Asset Management.
"The macro environment is disastrous, but it now offers a bargain for stocks which are cheap from a technical and valuation point of view," said Ii, adding that his firm has been buying Japanese stocks regularly during the recent sell-off.
"All these fears are weighing on stocks worldwide, but there are individual companies with solid earnings and growth prospects," he said.
Spanish yields eyed
Greece's inconclusive election earlier this month rattled markets and left sentiment shaky ahead of a crucial second vote on June 17.
Athens managed to hand €18bn to its four biggest banks on Monday, via bonds from the European Financial Stability Facility rescue fund, allowing the stricken banks to regain access to ECB funding.
But Spain, with its banking sector saddled with bad loans, looked set to use more public debt to recapitalise fragile lenders, raising concerns that a ballooning public debt could make its refinancing efforts even more difficult as borrowing costs surge.
Spanish 10-year bond yields jumped to 6.53% on Monday - their highest since November 2011 - pushing the yield premium over safe-haven German Bunds to 515 basis points, the widest in the 13-year history of the euro.
A 10-year sovereign debt yield exceeding 7% is widely seen as unsustainable for an economy, and could force the country to seek an international bailout, as was the case for Greece, Ireland and Portugal.
"The focus has never been just about Greece, but on countries like Spain and the risks of a contagion, and now with bond yields at dangerously high levels we are going to see markets on edge again," said Michael Creed, an economist at National Australia Bank.
Seeking pivotal catalyst
The climb in Spanish yields underscored the lack of confidence in Madrid's ability to stabilise its finances and banking sector.
"Everything is lined up for a corrective week for risk assets," said currency strategist Kit Juckes at Societe Generale in a note to clients.
"The release of the US labour report on Friday could potentially be pivotal for risk appetite. Many investors and traders will want to have light(er) positions in the run-up."
The euro failed to follow through on its short covering rally on Monday, remaining under strong selling pressure. Traders said a break below $1.25 could accelerate its downward spiral.
Asian credit markets softened, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 2 basis points.
Other riskier assets gained in tandem with the recovery in stocks.
US crude was up 0.5% at $91.30 a barrel and Brent rose 0.1% to $107.22.
Copper inched up 0.1% to $7 694 a tonne.