Asian shares and the euro struggled on Tuesday as stumbling talks on Greek debt restructuring reignited concerns over funding in other highly indebted countries, with markets starting to worry that Portugal might need a second bailout.

MSCI's broadest index of Asia-Pacific shares outside Japan opened lower, but had later inched up 0.2 percent and looked set to post a monthly gain of nearly 9 percent after falling in the prior two months.

The Nikkei average opened before reversing course to gain 0.3 percent.

Asian equities were supported for most of January as central banks worldwide took aggressive liquidity pumping steps to ease concerns over a credit crunch in Europe, while data painted a less pessimistic view on the U.S. and German economies.

Talks on a debt swap deal between the Greek government and private bond holders have been slow, but Prime Minister Lucas Papademos said significant progress has been and that he was seeking to reach an accord in parallel with consultations on a new loan package.

The comments helped lend slight support to shares and the euro.

At a summit meeting on Monday, European leaders agreed on a permanent rescue fund for the euro zone and most endorsed a German-inspired stricter budget discipline, but they fell short of reconciling fiscal austerity with growth.

The euro was at $1.3149, capped below a 6-1/2-week high of $1.3235. The dollar hovered near a record low against the yen, standing at 76.30 yen, just above an all-time low around 75.31 plumbed on Oct. 31.

The technical outlook for the euro was bearish, as suggested by the one-month option volatility in euro/dollar and the failure of the Standard & Poor's 500 Index to break above its 8-month resistance, said Ashraf Laidi, chief global strategist at retail trading services provider City Index Group, in a note.

He expects the euro to fall below $1.25 towards the end of March and only a rise above $1.35 would change his view.

"Even if the Greece secures a Private Sector Initiative deal and meets its 14.5 billion euro payment on March 20, the fiscal and growth objectives of the austerity efforts in Athens and Rome have yet to be mulled by IMF monitors, not to mention the liquidity difficulties encountered by Portuguese sovereign bonds," he said.

The yield on 10-year Portuguese government bonds rose to more than 17 percent, the highest level since the launch of the euro, stoking fears that Lisbon may become the next Athens in needing a second bailout to avoid chaotic bankruptcy.

But Italy, which only recently faced a fierce market attack on a lack of confidence in its refinancing ability, saw its longer-term borrowing costs fall to just above 6 percent on Monday, their lowest since October.

Foreign investors are still largely reluctant to take up longer-term Italian bonds, but the country's banks have stepped up purchases of domestic debt largely thanks to the European Central Bank's disbursement of cheap, three-year loans.

The Asian credit markets weakened slightly, with spreads on the iTraxx Asia ex-Japan investment grade index widening by around 4 basis points early on Tuesday.