The relief rally from the $1 trillion bailout package in Europe lost steam in Asia on 11 May as stocks fell, but bonds remained firm and prompted companies to sell debt.
Asian shares dropped, while the euro slipped and was off its Monday high as doubts persisted on the ability of the eurozone countries to cut swelling budget deficits and mounting debt.
The MSCI index of shares outside Japan fell 1.1 per cent, reversing a 3.4 per cent gain on Monday, its biggest single-day rise since May 2009.
Asian currencies, except for the Philippine peso, also retreated. The Korean won and the Singapore dollar gave up earlier gains as the market turned cautious over possible intervention by the central bank.
The peso gained over 1 per cent to 45.005 per dollar after a generally peaceful presidential election on Monday.
Bonds were resilient, as Asian spreads and the cost of insuring debt against default continued to ease on Tuesday from 10-month highs reached last week.
Signs that the debt market was stabilising were further affirmed when Macau casino operator Melco Crown Entertainment released pricing terms for its planned sale of up to $600 million in eight-year bonds.
Melco's debt sale has so far attracted $500 million in orders with US accounts driving the deal, according to IFR Asia.
* Renhe Commercial Holdings was expected to price its 5-year bonds this week after delaying the pricing last Friday. Steelmaker China Oriental and Korea Exchange Bank are also expected to issue bonds.
* The broad Asia ex-Japan iTraxx investment-grade index narrowed 4 bps on Tuesday to 107/109 from Monday's close and as much as 43 bps from Friday's peak of 150 bps, the highest since July 2009.
* The credit default swaps (CDS) of Indonesia and the Philippines, the region's most active issuers in the global debt market, eased after climbing to their highest since July 2009 on Friday.
* Indonesia's five-year CDS was 10 bps tighter at 164/169, while the Philippines' five-year CDS tightened 5 bps at 160/170, traders said.
* Japanese government bond futures erased earlier losses as Tokyo shares slid.
* Indian federal bond yields fell on short covering, with the yield on the most traded 8.20 per cent bond due in 2022 down 4 bps to 7.90 per cent
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