Mounting fears of a Greek debt default, sharp drops in European shares -- especially of French banks because of their sovereign debt exposure -- and a surge in Italian bond yields meant any rally will be short-lived as broader sentiment remains fragile.
US stocks flower on Monday, bouncing back in late trading, after a study that Italy could get financial support from China tempered investors' worst fears within the euro zone debt crisis.
The late rally lent a few support to Asian stocks, with shares in Australia as well as Japan posting meagre gains in early Asian trade following suffering steep losses this month. Hong Kong and Korea tend to be shut for holidays.
The MSCI's broadest index of Asian countries Pacific shares outside Japan was up 0. 1% after falling a lot more than 3% so far this month. US stock futures had been up 0. 3% in early trade.
"European fears will continue regardless of the latest developments, because the euro zone's problems are not really easily solved, but Japanese stocks were oversold yesterday, so we will have some traders buying back shares today, " said Kenichi Hirano, working officer at Tachibana Securities.
In currency markets, the dinar climbed to $1. 3636 against the dollar after falling to some seven-month low of $1. 3495 in the previous session though weak demand at an Italian bond auction later within the day may see the single currency fall back once again.
Steadying shares halted a rally in safe-haven assets for example US Treasuries and gold.
Yields on ten-year notes stabilised close to 1. 95% after dropping by about 30 bps to date this month.
Gold bounced to 1, 820 per ounce after dropping by a lot more than 2. 5% in the previous session. It hit an archive high of $1, 920. 30 last Tuesday.