Markets recovered some ground on Monday on value hunting after last week's heavy losses, but investors remained wary over the euro zone despite world leaders calling for Greece to stay in the monetary union and for Europe to balance austerity with growth.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, buoyed by its technology sector which by far outperformed its peers with a 1.3 percent gain. Investors scooped cheapened blue chips, helping to lift tech-heavy Korean equity market above a key chart level.
The pan-Asian index fell to a 2012 low on Friday, having lost about 6 percent in the week for its worst weekly performance in nearly eight months.
European shares were likely to be even more cautiously traded than Asia, with financial spreadbetters predicting that major European markets would open down as much as 1 percent. US stock futures were up 0.5 percent, reflecting a lack of market direction.
"Investors saw some attractive valuations in the big tech stocks, which was the most heavily-hit sector during last week's market plunge, but that's about as much additional risk that investors are willing to take on at this point,» said Park Suk-hyun, an analyst at KTB Securities.
Japan's Nikkei stock average gained 0.4 percent, after logging a seventh straight week of losses last week, its longest such losing streak since the third quarter of 2011.
Leaders of G8 major industrialized nations meeting at the weekend vowed to take steps to combat financial turmoil and revitalize a global economy threatened by Europe's debt crisis, but they offered no specific prescription for debt-crippled Greece which holds fresh elections on June 17.
"Today's move is merely a rebound from sharp losses on Friday and it doesn't have momentum to rise strongly. The G8 outcome lacked the punch to give much incentive for markets,» said Hirokazu Yuihama, a senior strategist at Daiwa Securities in Tokyo.
Currently, many market players see the main scenario as Greece staying in the euro and European leaders making some compromises to maintain financial lifelines for the country.
But deepening banking sector instability in Spain heightened concerns about contagion from Greek political turmoil, keeping investors' risk-aversion intact at least until the Greek election makes clear whether the nation will stay or leave the euro, traders and analysts said.
"There's a lot of talk and no substance. Until you get some certainty about Greece and the fear of contagion eases, the volatility is here to stay,» said Savanth Sebastian, an economist at CommSec.
The euro inched up 0.1 percent to $1.2793, moving away from a four-month low of $1.2642 reached on Friday, which was not far from its trough of 2012.
But investor nervousness prevented the yen, widely perceived as a safe haven, to ease significantly from its three-month high against the dollar of 79.001 yen hit on Friday. The yen stood at 79.18 on Monday.
With a steadying euro, spot gold added 0.4 percent to $1,598.46 an ounce, after rising more than 1 percent on Friday.
The G8 suggested mounting global support for highly indebted euro zone economies to be allowed to take less strict austerity measures and put more priority on stimulating growth. Reports also suggested Greece's anti-austerity forces could soften their stance to avoid a catastrophic outcome for the nation.
Yuji Saito, director of foreign exchange at Credit Agricole Bank in Tokyo, said the G8 comments were positive, but it did not offer a buying incentive for the euro. Rather, he was eyeing whether the yen would breach its 200-day moving average, currently at 78.50 yen, and trigger the yen's further climb.
Saito said markets were turning to an upcoming European summit on May 23 and comments about the Greece election.
The May 23 summit will focus attention on whether European leaders can strike a new balance between growth and the fiscal reforms deemed vital to fixing the euro zone's debt crisis and regaining market confidence in the single currency.
Recent opinion polls show Greek voters are returning to the establishment parties that negotiated its bailout, offering potential salvation for European leaders.
Alexis Tsipras, the Greek leftist who polled strongly in the inconclusive May 6 election, says he wants talks to keep Greece in the euro. He is looking to forge ties with like-minded European figures such as French President Francois Hollande.
Oil prices recovered on Monday, with US crude up 0.5 percent at $91.90 a barrel, after falling more than 1 percent on Friday. Brent crude, which closed at its lowest in 2012 on Friday, rose 0.7 percent at $107.89 a barrel.
China's premier called for additional efforts to support growth on Sunday, raising hopes for more stimulus steps to lift demand in the world's second largest economy. He also vowed to maintain his campaign to cool down its property market.
As risk aversion intensified on Friday, the CBOE VIX Volatility index, a gauge of investor anxiety that measures expected volatility in the Standard & Poor's 500 index over the next 30 days, rose 2.5 percent to close above 25 for the first time since mid-December.
Asian credit markets stabilized on Monday on short covering after the G8 meeting, but underlying sentiment was defensive, traders said. The spread on the iTraxx Asia ex-Japan investment-grade index was little changed from Friday, when it reached its widest level since early January.