Asian shares and the euro steadied on Wednesday but lacked the impetus for a decisive rebound, as investors continued to fret about the looming fiscal cliff in the United States and a delay in releasing more aid to debt-stricken Greece.
Since the re-election of U.S. President Barack Obama, markets have been focusing attention on how a divided Washington will tackle the series of mandated tax hikes and spending cuts that start to take effect next year and could pitch the world's largest economy back into recession.
Although a technical rebound is possible after the Japanese market has dropped a lot, with such lingering concerns on the U.S. and Europe, investors are staying risk averse, said Hiroichi Nishi, general manager at SMBC Nikko Securities.
MSCI's broadest index of Asia Pacific shares outside Japan rose 0.3 percent after falling to a seven-week low in the previous session, and Tokyo's Nikkei edged up 0.1 percent after seven straight days in the red.
Worries about the U.S. economy, together with the prospect of weaker demand from a slowing China, also weighed on industrial commodities, with oil and copper both losing ground.
U.S. stock index futures gained 0.3 percent after a decline in Wall Street shares in Tuesday's session, led by a slide of more than 3 percent for Microsoft following the surprise departure of a key executive.
After the U.S. closing bell, Cisco Systems shares rose 6.8 percent to $18 after it reported quarterly revenue and earnings that beat analysts' estimates.
GREEK BAILOUT DEAL
Weak German business confidence data on Tuesday offered more evidence that the pain from the euro zone debt crisis is spreading even to the bloc's strongest economies, knocking the euro down to its lowest level in more than two months.
The single currency rose 0.2 percent to around $1.2722 on Wednesday and climbed around 0.3 percent against the yen.
The single currency has fallen nearly 2 percent against the dollar and more than 1.5 percent against the yen in November as concerns about Greece and Spain have pushed investors towards the safe-haven U.S. and Japanese currencies.
Greece's international lenders on Monday gave the country more time to fix its budget, though they did not disburse the aid Greece had hoped to use to refinance 5 billion euros of its debt by Friday.
The International Monetary Fund and euro zone policymakers remain at odds over a long-term target to bring Greece's debt down and the IMF's push for the euro zone to take further losses on Greek debt.
For the moment, the market's focus is on whether they can decide on a deal for Greece next week, said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
Commodity markets were subdued, with Brent crude easing 0.3 percent to fall just below $108 a barrel and U.S. crude off a few cents around $85.35.
Copper lost 0.2 percent to $7,665 a tonne, but gold inched up, gaining 0.2 percent to trade around $1,728.50 an ounce.