Investors appear to be still trimming their long positions, bringing markets closer to their bottoms, I personally think that recent steep falls increasingly limit the scope for markets' downside and that investors, with their positions lightened by the recent sell-off, are gearing up for a turnaround,
Investors will be watching whether European leaders can come up with fresh measures to contain the euro zone's debt crisis as the problem escalates from concerns about a Greek exit to Spain's banking instability.
European Union leaders are expected to discuss later on Wednesday the idea of regional bonds jointly underwritten by all euro zone member states. New French President Francois Hollande supports the proposal but German Chancellor Angela Merkel is opposed to it.
Greece's bank stability fund approved an 18 billion euro ($22.96 billion) injection to recapitalise its four largest banks on Tuesday, allowing them to again tap funding from the European Central Bank, which cut off some Greek banks last week because they lacked enough capital to be considered solvent.
European leaders will later in the day meet in Brussels to discuss solutions to the Greek crisis as the country prepares to hold a second general election on June 17.
Analysts fear a likely victory for anti-austerity parties will see Athens renege on its bailout terms and eventually leave the euro, which could have a knock-on effect for other troubled economies such as Spain and Italy.
The Aussie dollar touched a six-month low around $0.9742 on Wednesday as investors dumped riskier, higher-yielding assets over fears of a Greek exit from the euro.
The euro earlier in the session came just a touch above a four-month low of $1.2642 reached on Friday when concerns about Greece were compounded by mounting banking stress in Spain. The euro last stood at $1.2680.
Asian markets reversed the previous day's gains and the euro sank back towards four-month lows Wednesday after Greece's former premier warned there was a chance his country will exit the eurozone.
Tokyo fell 1.21 percent by the break, Hong Kong shed 1.54 percent, Sydney lost 1.26 percent, Seoul was 1.61 percent lower and Shanghai eased 0.17 percent.
There were also concerns over Wednesday's summit after Germany reasserted its stance against eurobonds -- which would see nations guarantee each other's borrowings -- despite calls from other members, including France, to look at the plan.
The single currency fell to $1.2653 in early Tokyo trade, down from $1.2684 late Tuesday in New York and well off the $1.2815 touched on Monday.
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