Investors were also hoping that the intensifying problems in Europe and disappointing Chinese and U.S. data could prompt the European Central Bank (ECB) and the Federal Reserve to announce some stimulus measures to help their economies.

The euro rose as high as $1.25429, its highest in a week, extending its rebound from a two-year low of $1.2288 reached on Friday, though there remains plenty of concern about the likelihood of coordinated government or central bank action.

"The respite looks temporary unless followed by concrete measures out of the euro zone to stem the crisis," said Mitul Kotecha, Head of Global FX Strategy at Credit Agricole CIB.

News of the talks between the finance ministers of the Group of Seven (G7) leading industrialized powers earlier lifted MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS by 1.2 percent, snapping a four-day losing streak. The MSCI world equity index .MIWD00000PUS was up 0.2 percent at 292.01.

The euro zone's blue-chip Euro STOXX 50 .STOXX50E index opened 0.6 percent higher at 2,091.14 points, extending its 0.5 percent gain on Monday but in muted volumes as UK markets remain closed for a holiday.

(Reporting by Richard Hubbard; Editing by Will Waterman)

• A Permanent Economic Emergency