HONG KONG - Asian markets mostly recovered Tuesday from the previous day's Greece-fuelled sell-off, but Shanghai sank again as analysts warned government measures to staunch a recent rout will likely not be enough.
The euro held its ground after Greece's weekend vote against creditors' austerity proposals, with dealers hoping contagion will be limited if a bailout reform deal cannot be reached.
Crude prices also edged up after taking a hammering Monday on demand fears owing to the Greek crisis and China's struggles to stabilise its stock markets.
Tokyo rose 1.34 percent, Sydney added 1.75 percent, Hong Kong gained 0.62 percent, Taipei advanced 0.50 percent and Wellington put on 0.63 percent. Seoul lost 0.52 percent.
But Shanghai dived 3.21 percent at the open, after Monday's uptick, before recovering to sit 1.45 percent lower.
Eyes are on Europe, where Greece's Prime Minister Alexis Tsipras will unveil new proposals Tuesday at a hastily arranged emergency eurozone summit in Brussels.
Market tensions have risen as the European Central Bank ratcheted up pressure on Athens by tightening collateral conditions for liquidity funding to the country's commercial banks.
"It is now up to the government of Alexis Tsipras to make serious, credible proposals so that this willingness to stay in the eurozone can translate into a lasting programme," said French President Francois Hollande after crisis talks in Paris with German Chancellor Angela Merkel.
With the country's economy on the brink, the Greek government has extended an eight-day bank closure until Thursday on fears cash machines will run dry.
The European Central Bank, which has been keeping lenders afloat, announced it would maintain a key financial lifeline to them, but turned the screw by raising the bar for them to access the emergency funds.
Analysts said investors are now in a wait-and-see mode.
China 'fall-out' risk
I think it's going to be hard to get any real traction until we get some type of clarity," Walter Todd, a chief investment officer at Greenwood Capital Associates LLC in South Carolina, told Bloomberg News.
The euro stood its ground, buying US$1.1047 and 135.55 yen in Tokyo Tuesday, compared with 1.1057 and 135.50 yen in New York.
The dollar was at 122.71 yen against 122.55 yen. Traders have edged out of the safe-bet yen as risk aversion subsides.
While US and European stocks slipped, the sell-off in leading markets was not painful.
On Wall Street the Dow eased 0.26 percent, the S&P 500 shed 0.39 percent and the Nasdaq dropped 0.34 percent.
"Possibly what the market is saying is either the expectation for a 'No' vote and for an exit are already priced into the US market, or the expectation is whatever happens in Greece related to Europe won't adversely affect US growth," said Sam Stovall, chief investment strategist at S&P Capital IQ.
Paris fell 2.01 percent and Frankfurt shed 1.52 percent, while London was 0.76 percent lower.
However, Shanghai volatility continues despite government measures at the weekend to halt initial public offerings (IPOs) - to stop liquidity drying up - and moves to pour billions of yuan into the market to end three weeks of plunging prices.
But analysts said the measures are not enough and could be causing problems.
"The more resources authorities commit to propping up the stock market, the more they ratchet up the potential fall-out risks should the market continue to collapse," said Andrew Wood, an analyst at BMI Research.
"This could give rise to a crisis of confidence in the authorities' ability to support both the stock market and the real economy." Oil prices bounced back slightly after plunging almost eight percent Monday, with fresh oversupply worries as Iran's nuclear talks progress, raising the possibility sanctions on its exports could be removed.
US benchmark West Texas Intermediate for August delivery rose 49 cents to US$53.02 a barrel and Brent crude for August advanced 67 cents to US$57.21.
Gold fetched US$1,169.08 compared with US$1,167.50 late Monday.