Most Asian markets edged higher Tuesday, enjoying a slight recovery after the previous day's rout, with Greece just hours away from default, while Shanghai ended flat after another highly volatile morning.
The euro edged down and analysts warned of sharp movements this week as Greece prepares for a Sunday referendum on creditors' bailout reform proposals, which European chiefs say boils down to a vote on whether the nation wants to stay in the eurozone.
Tokyo rose 0.27 percent in the afternoon, Hong Kong climbed 1.21 percent by lunch and Seoul put on 0.20 percent. However, Sydney was flat in late trade.
Shanghai continued to face heavy selling pressure, more than five percent at one point -- extending more than 20 percent losses from a June 12 peak -- before clawing back to end barely changed. Shenzhen lost 2.16 percent, having sunk more than six percent earlier
With talks between Athens' leaders and creditors now completely broken down after Prime Minister Alexis Tsipras called the July 5 plebiscite, Greece is widely expected to miss its payment to the IMF due later Tuesday.
"(How) is it possible the creditors are waiting for the IMF payment while our banks are being suffocated?" Tsipras said in a late-evening interview on ERT television in Greece.
Failure to pay will leave the country in default, which could lead to it leaving the eurozone. However, top European leaders including Germany's Angela Merkel, France's Francois Hollande and Italy's Matteo Renzi called on the Greek people to vote for the creditors' proposals.
"A 'No' would mean, regardless of the question posed, that Greece had said no to Europe," said EU chief Jean-Claude Juncker, previously Tsipras's closest -- and sometimes only -- ally in five months of debt talks.
The decision to push ahead with the vote led Standard & Poor's rating agency to downgrade Greece's credit rating deeper into junk territory, saying it was now closer to default.
- Euro surprise -
The crisis sent markets tumbling across Europe and in New York.
The euro ended Monday higher but edged down on Tuesday.
It bought $1.1192 and 136.90 yen in Asia, against $1.1247 and 137.82 yen in New York.
"Right now the biggest surprise is that the euro is not materially weaker," Matthew Sherwood, head of investment markets research in Sydney at Perpetual Ltd, which manages about $21 billion, wrote to clients.
"Market expectations are that the Greek situation is manageable even if they exit the union," he said, according to Bloomberg News.
The dollar edged up to 122.33 yen from 122.55 yen.
In Shanghai dealers bought on the dip after heavy morning selling. The index had run up gains of 150 percent in the year to June 12, with profit-takers moving in and after authorities tightened rules on margin trading, in which dealers borrow cash to invest.
The market lost more than three percent Monday, putting it in a bear market and economists warned of further losses as retail investors cash in and the margin trades are called in.
The losses have also come despite China's central bank at the weekend cutting interest rates for the fourth time since November and also lowering the amount of cash lenders must keep in reserve.
"The correction in the market made investors rather nervous," said Gerry Alfonso, a director at Shenwan Hongyuan Group Co. in Shanghai.
"Margin lending remains a significant issue and it is unavoidable to have volatility, even with the supporting measures."
On oil markets US benchmark West Texas Intermediate for August delivery fell 23 cents to $58.10 while Brent eased 15 cents to $61.86 in late-morning trade.
Gold fetched $1,177.12 compared with $1,177.05 late Monday.