Asian shares mixed amid fears over Europe debt

And in Australia deadly floods in the northeast put further pressure on the Sydney index after news that nine people were killed and 66 left missing in the latest deluges.

Several markets pared back the morning's losses on bargain-buying, with some creeping into positive territory.

Tokyo slipped 0.29 per cent, or 30.36 points, to 10,510.68 and Sydney edged down 1.6 points to 4,710.7, well off earlier lows. Shanghai edged 0.11 per cent lower.

Seoul gained 0.36 per cent, or 7.51 points, to 2,088.32 and Hong Kong rose 0.97 per cent by the break while Singapore added 0.26 per cent.

Markets followed their counterparts in Europe and the United States lower as traders fretted about European sovereign debt ahead of Portugal, Spain and Italy's bond issues this week.

Worries resurfaced after reports that Germany and France had pressed Lisbon to accept a bailout, after Ireland and Greece last year had to call for help from the International Monetary Fund and European Union.

Portugal and Spain go into the bond sales with their cost of borrowing hovering at record highs, adding to speculation Lisbon may need help to avoid a debt crisis.

The European Commission insisted there was no discussion of a Portuguese bailout and rejected reports saying so, but a diplomat told AFP that "there is a lot of pressure on Portugal."

And Okasan Securities strategist Hideyuki Ishiguro said: "Investors are concerned following (Monday's) decline in European shares ahead of the (government) bond auctions in Portugal and Spain" this week.

However, the euro was given a boost in early Tokyo forex trade after Finance Minister Yoshihiko Noda said Japan would buy bonds to be issued by the European Union this month, aimed at providing support to troubled members.

But the unit soon fell back as excitement waned.

The single currency spiked to $1.2990 in Tokyo morning trade from $1.2920 immediately after Noda's comments, but fell back to $1.2953 by the afternoon, lower than $1.2955 in New York late Monday.

Against the Japanese currency, the euro traded at 107.51 in the afternoon, up from 107.10 in New York. The dollar was at 83.09 yen, up from 82.67 yen.

Investors in Sydney pulled out of insurance companies as floods in Queensland continued to wreak havoc, with flash floods smashing through Toowoomba and other mountainside towns.

Authorities said eight were killed and 72 still unaccounted for.

"You've got to think what implications this (Queensland flood) has on the banks as well as insurers," UBS executive director, Mark Fitzgerald told Dow Jones Newswires.

"A lot of the state is underinsured... There is a lot of uncertainty."

Insurer Suncorp-Metway was down 2.4 per cent while the banking sector was also lower, with Bank of Queensland down 0.5 per cent.

On oil markets New York's main contract, light sweet crude for delivery in February, rose four cents to $89.29 per barrel and Brent North Sea crude for February was down 18 cents to $95.52.

Gold opened at $1,373.50-$1,374.50 an ounce in Hong Kong, marginally higher than Monday's close of $1,373.00-$1,374.00.

In other markets:

-- Taipei rose 1.29 per cent, or 113.48 points, to 8,931.36.

Largan Precision closed 3.44 per cent higher at Tw$812.0 while leading IC design house MediaTek was up 3.38 per cent at Tw$398.0.

-- Manila tumbled 1.94 per cent, or 79.63 points, to 4,032.95.

Aboitiz Power shed 4.8 per cent to 27.60 pesos but Manila Electric jumped 6.8 per cent to 260, helping to temper the market decline.

-- Wellington closed 0.17 per cent, or 5.66 points, higher at 3,329.73.

Fletcher Building gained 0.6 per cent to NZ$7.83 and Telecom added 0.9 per cent to NZ$2.20.