The euro clawed back some of the heavy losses it suffered on Monday, when it hit a 10-year low versus the yen, but it remained under pressure as traders stayed risk averse due to a lack of indicators to push it upwards.

Tokyo rose 0.31 percent by the break, Sydney was 0.59 percent higher and

Singapore added 0.79 percent.

But Shanghai was 1.38 percent lower as it played catch-up with Monday's trade, which saw huge regional losses. Hong Kong and Seoul were closed for public holidays.

Investors are likely to buy back shares following Monday's sell-off in the absence of additional headlines showing further deterioration of the Greek debt crisis, said Kenichi Hirano, operating officer at Tachibana Securities.

But Greece-related concerns remain, Hirano told Dow Jones Newswires.

"Nothing has fundamentally changed," he said.

Dealers took some solace from a report in the Financial Times that Beijing could buy bonds from Italy, which is considered one of the eurozone economies that is in danger of needing a bailout following Greece, Portugal and

Ireland.

The news that China was "in discussions to purchase Italian debt has calmed the market; remember that China eased European tensions in the past by purchasing Spain's debt back in January," noted Emma Lawson at National

Australia Bank.

The euro was lifted slightly by the news. It fetched $1.3677 in early Asian trade on Tuesday, slightly down from $1.3680 in New York late Monday but well up from the levels near $1.3500 on Monday.

The common European currency was at 105.33 yen against 105.56 in New York late Monday after falling below 104.00 earlier in the day to a new 10-year low.

The dollar Tuesday edged down to 77.03 yen from 77.15.

The Dow saw a late rally to end up 0.63 percent on the China-Italy report, while the S&P 500 climbed 0.70 percent and the Nasdaq Composite rallied 1.10 percent.

The US gains came despite a big sell-off in Asia and Europe on Monday caused by renewed fears that Greece which was recently given the green light for a second bailout could default on its debt repayments.

Germany's Economy Minister Philipp Roesler said Monday that Europe could no longer rule out an "orderly default" for Greece, while Der Spiegel said Berlin officials were considering a possible scenario of Athens returning to the drachma if it defaults. However, the officials denied this.

New York's main contract, light sweet crude for delivery in October, was up 75 cents to $88.94 per barrel in morning Asian trade, while Brent North Sea crude for October delivery fell 52 cents to $112.25.

Gold was trading at $1,826.00 an ounce at 0100 GMT on Tuesday, down from $1,841.20 in late trade Monday.

Copyright AFP (Agence France-Presse), 2011