Global shares edge up as Spain, Greece in focus

US stocks took their cues from Europe's troubled debt markets on Tuesday, staging a comeback rally to end up more than 1 percent as Spanish bond yields came off euro-era record highs.

The Dow Jones industrial average gained 162.57 points, or 1.31 percent, to 12,573.80. The Standard & Poor's 500 Index rose 15.25 points, or 1.17 percent, to 1,324.18. The Nasdaq Composite Index added 33.34 points, or 1.19 percent, to 2,843.07.

European shares closed higher after a volatile session, led by gains in Frankfurt and Paris, although persistent fears over the Spanish and Greek debt crises caused many investors to hold onto their cash and avoid equities.

The FTSEurofirst 300 index ended up 0.7 percent at 990.18 points, its highest closing level in two weeks.

The index had at one stage fallen as much as 0.3 percent to an intraday low of 980.14 points, as Spanish 10-year bond yields hit their highest level of the euro era due to worries over a bailout deal for the country's banks.

In Asia, Nikkei share average fell, taking back half of yesterday gains as a promised bailout for Spanish banks left investors unconvinced that financial contagion would be contained, and doubts about the euro zone's future crept back.

The Nikkei pared losses in the afternoon but closed down 1 percent at 8,536.72, a whisker above its 14-day moving average of 8,534.42. The broader Topix index dropped 1.4 percent to 719.98 in moderate volume, at 80 percent of its average last week.