Asian stocks fell Tuesday as a relief rally triggered by a $1 trillion plan to contain Europe's debt crisis fizzled out.
Most of the region's markets opened higher following a broad advance in Europe and on Wall Street but couldn't sustain gains for a second day running.
As elation faded about the European Union's headline-grabbing moves to defend the euro and quarantine the debt woes of financially shaky member states, investors returned to fretting over the strength of Asia's economic recovery.
Oil prices, meanwhile, slipped toward $76 a barrel and the euro, which rebounded the day before from a 14-month low, surrendered some of its gains against the dollar.
"The bailout doesn't necessarily change the economic outlook for the euro-zone," said Lorraine Tan, director of equities research at Standard & Poor's in Singapore. "For Asian markets, the overriding factor over the midterm has been the prospect of higher interest rates, and the bailout doesn't change that concern either."
Japan's Nikkei 225 stock average fell 1.2 percent to 10,403.43 after jumping 1.6 percent on Monday. South Korea's Kospi dropped 0.6 percent and Australia's S&P/ASX 200 was down 0.9 percent.
Benchmarks in mainland China, Taiwan, India, and Singapore also slid, while Hong Kong's Hang Seng index retreated 1.4 percent to 20,135.36.
Stocks in the Philippines bucked the regional trend, surging 3.9 percent as Sen. Benigno Aquino III, son of Philippine democracy icon Corazon Aquino, opened up a commanding lead in presidential elections after campaigning on an anti-graft platform.
Overnight on Wall Street, stocks rocketed to their biggest gain in a year. The Dow Jones industrials surged 3.9 percent to 10,785.14.
Investors were reassured Monday after the European Union and the International Monetary Fund agreed to create a nearly $1 trillion rescue fund to support European nations burdened by heavy debt. The size of Europe's response was greater than most analysts had expected, and it signaled that policymakers are ready to take major measures to protect the euro and keep Europe's problems from spreading.
Markets were also relieved that the Federal Reserve and other central banks stepped up with financial support to corral what analysts warned was a growing financial crisis.
But many investors have been spooked by this month's pullback and wild stock price fluctuations.
"With the return of volatility, a lot of investors have been told to be more defensive and hold more cash," Tan said. "People aren't going to change back just yet."
"There's a continued risk aversion and people just want to sit out the current volatility."
The Standard & Poor's 500 index shot up 4.4 percent to 1,159.73. Like the Dow, it was the best day for the S&P 500 index since March 23, 2009. The Nasdaq composite index rose 109.03, or 4.8 percent, to 2,374.67.
Benchmark crude for June delivery was down 31 cents to $76.49 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.69 to $76.80 per barrel on Monday.
In currencies, the dollar fell to 92.66 yen from 93.29 yen late Monday while the euro slipped to $1.2726 from $1.2790.
This program aired on May 11, 2010. The audio for this program is not available.