Asian shares eased on Thursday while the euro firmed, reflecting investor caution despite easing concerns about sovereign funding for troubled euro zone economies Spain and Italy that helped US and European equities rebound overnight.
Investors scaled back safe haven buying of gold and US and German government debt, while an encouraging start to earnings season helped US stocks snap a five-day losing streak.
MSCI's broadest index of Asia Pacific shares outside Japan inched down 0.1%, while Japan's Nikkei average opened up 0.3%, after hitting its lowest in nearly two months the day before.
Along with recent data from the United States and China suggesting a slowdown in economic recovery, resurfacing worries about Spain's fiscal woes as well as Italy persisted despite a better-than-expected sovereign debt auction by Italy and supportive comments from a European Central Bank official on Spain.
"The reprieve may prove to be temporary," Barclays Capital analysts said in a research note. "(We) remain concerned about sustained appetite for peripheral European debt amid waning foreign demand in an increasingly fragmented market," they said.
Investors will use a 5 billion euro bond sale by Italy later on Thursday to gauge market risk tolerance.
Yields on Spanish and Italian sovereign debt are still well below the highs of 2012 when they breached the critical levels, while dollar funding rates in Europe have remained stable.
The euro crept higher against the dollar, reaching a one-week high of $1.3158 before retreating to $1.3123. That kept the currency within the $1.3030-$1.3165 range seen in the past week.
"The relief could be felt more globally, but it was limited in scope indicating that we remain in a roller coaster and are not at the end of it yet," said Sebastien Galy, strategist at Societe General.
The Federal Reserve on Wednesday provided an assuring assessment of the US economy in its latest "Beige Book" summary of national activity, after Friday's data showing a sharp slowdown in US jobs creation in March triggered a sell-off in global markets earlier this week.
US economic activity kept growing moderately in the late winter months but rising energy prices were beginning to worry manufacturers and retailers across the country, the Fed said.
Fed policymakers will use the information at the April 23-24 meeting to consider whether to change interest-rate policy.
Comments by two top US Fed officials on Wednesday suggest the central bank is on hold as it waits to see whether a modest recovery will accelerate despite some stumbles, or whether additional monetary stimulus will be needed.
Oil recovered on Wednesday, with Brent futures settled up 30 cents at $120.18 a barrel after touching a near two-month low of $119.05. US oil futures eased 0.2% to $102.55 after settling up $1.68 on Wednesday.
Asian credit markets improved slightly, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing by 1 basis point.