Asian markets were mostly lower Tuesday, as European concerns continued to weigh on sentiment.
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Cyprus remained the focus for markets in Asia after Eurogroup head Jeroen Dijsselbloem on Monday said that the structure of the island's rescue package could serve as a template for future bailouts in region, according to media reports.
Although Mr. Dijsselbloem subsequently backed away from the comments, they had already put an end to the relief rally that followed Monday's bailout agreement.
Investors fear that the plan to impose losses on bondholders and some depositors could be repeated in other countries, dispelling the notion that the approach in Cyprus was a one-off solution, and raising concerns over a loss of confidence in deposits held by banks in the euro zone's peripheral countries.
"The market isn't convinced that what we have seen in Cyprus won't have long-term effects on the euro zone," said Tim Waterer, senior trader at CMC Markets in Sydney.
After falling 1.0% against the U.S. dollar overnight, the euro started to recover in Asian trade�and was recently at $1.2867, compared with $1.2853 late Monday in New York.
The market most affected by the continued European jitters was Australia, where S&P/ASX 200 fell 0.7%, with mining stocks leading broad-based declines: Rio Tinto dropped 2.0% and BHP Billiton was 1.2% lower.
Other markets across the region remained in negative territory. In China, the Shanghai Composite Index dropped 1.6% on the mainland, while Hong Kong's Hang Seng Index lost 0.5%.
Investors in Hong Kong were digesting a string of earnings releases from large companies.
Gome Electrical Appliances Holding's jumped 3.4% in Hong Kong despite the electronics retailer announcing that it had swung to a net loss in 2012. The loss was expected, with a profit warning issued in January, while the company's fourth quarter results suggested a turnaround for earnings.
Also in Hong Kong, developer Henderson Land gained 2.6% after the company announced that its net profit rose 28% on-year in 2012.
Japanese stocks pared some of their earlier losses as the dollar strengthened against the yen.
The greenback climbed to �94.31, compared with �94.21 late Monday in New York, after Bank of Japan Governor Haruhiko Kuroda gave some clues on how the approach to monetary policy at the central bank might change under his control. Speaking at a parliamentary session, he said that buying five-year or longer-term government securities is one possible form of easing.
The Nikkei Stock Average was last down 0.2%, with some support from index heavyweight Softbank, which gained 2.4% after the firm announced that it would make a tender offer in April to increase its stake in GungHo Online Entertainment .
South Korea's Kospi Composite added 0.3%.
Write to Daniel Inman at daniel.inman@wsj.com
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