The benchmark Nikkei 225 index at the Tokyo Stock Exchange, which tumbled 2.31 percent to close at a 29-month low on Monday, was up 26.30 points to 8,561.97.

The Topix index of first section issues added 2.99 points, or 0.40 percent, to 744.25.

Bargain buying after Monday's falls lifted the Nikkei but analysts warned that risk appetite remained heavily constrained by worries over European debt.

"Nothing has fundamentally changed," Kenichi Hirano, operating officer at Tachibana Securities, told Dow Jones Newswires.

However, Hideyuki Ishiguro, supervisor of investment strategy at Okasan Securities said there was a growing view that a Greece default may occur "in a controlled fashion".

Exporters with exposure to the eurozone were lower.

Sony fell 1.19 percent to 1,486 and Canon was down 0.14 percent at 3,405 while Panasonic shares fell 1.32 percent to 742.

Suzuki Motor rose 3.43 percent to 1,535 after the company moved to sever its ties with Volkswagen AG, seeking to end an increasingly frayed relationship.

Nintendo was off 4.23 percent at 12,430 in Osaka with the market expecting the firm's upcoming 3DS Conference to underwhelm, given that new software titles have already been announced ahead of it.

Wall Street posted a last-minute rally on Monday despite falls in Asia and Europe.

The Dow Jones Industrial Average closed up 0.63 percent, while the broader S&P 500 climbed 0.70 percent and the tech-heavy Nasdaq Composite was up 1.10 percent, rebounding from steep initial losses.

The rebound was triggered by a report in the Financial Times that China was in talks to buy Italian government bonds and optimism that stocks might be oversold amid overblown fears of a global economic slowdown, brokers said.

The euro fetched $1.3661 in Tokyo trade, slightly down from $1.3680 in New York late Monday. The unit traded at 105.35 yen compared to 105.56 yen, after falling to a ten-year low of 103.89 Monday.

The dollar was rangebound at 77.09 yen against 77.15 yen.

Copyright AFP (Agence France-Presse), 2011