(Reuters) - Asian shares nudged up Wednesday but were capped by concerns that Europe's financial strains could intensify without a global response, as Spain warned that it was being shut out of credit markets.
Finance ministers from the Group of Seven major economies discussed progress towards financial and fiscal union in Europe in an emergency call on Tuesday and agreed to work together to deal with the problems in Spain and Greece, but took no joint action.
Spain sent a distress signal about the impact of the country's banking crisis on government borrowing, saying Madrid was losing access to credit markets at current rates and urged Europe to help revive its troubled banks.
However, sources told Reuters that no decisions can be made on how to help Madrid recapitalize its banks until the first phase of an independent banking audit is completed this month.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> edged up 0.2 percent and Japan's Nikkei average <.N225> opened up 0.6 percent, helped by Tuesday's data showing the U.S. services sector improved in May. .T
European shares managed to eke out gains on Tuesday on hopes of global central bank policy action to revive the economic recovery, but prospects were less than certain.
The European Central Bank holds its monthly rate-setting meeting later on Wednesday, and U.S. Federal Reserve Chairman Ben Bernanke will testify before a congressional panel on Thursday.
Bleak as the euro area outlook is, it could easily get worse after the Greek election on 17 June and there may be an argument for the ECB keeping its powder dry, said James Nixon, chief European economist at Societe Generale.
More substantively, we believe the ECB is increasingly concerned by the moral hazard actions. Each time it intervenes it merely eases the pressure on Europe's political leaders, he said.
James Bullard, president of the St. Louis Federal Reserve Bank, and Dallas Fed President Richard Fisher on Tuesday suggested the U.S. central bank was not preparing to ease monetary policy at a meeting later this month, saying the economic outlook had not deteriorated to the point where action was warranted.
The euro inched up 0.1 percent at $1.2460, off Tuesday's one-week peak of $1.2543 but still above a near two-year trough of $1.2288 hit on Friday.
The euro was likely to be capped below $1.25, with Tuesday's purchasing managers indexes showing the euro area's vast private economy shrank in May at the fastest pace in nearly three years, with company order books collapsing, suggesting even Germany is no longer immune to the crisis.
Sentiment was hardly helped by Moody's Investors Service downgrading the credit ratings of several German banks on Wednesday, citing increased risk of further shocks emanating from theeuro zone debt crisis and their limited loss-absorption capacity.
The yen eased against the dollar to 78.73 after Japan on Tuesday signaled it was prepared to intervene to curb its currency. The Japanese currency even fell against the euro and traded down 0.1 percent at 98.08 yen on Wednesday.
U.S. crude futures edged up 0.1 percent to $84.40 a barrel and Brent held steady around $98.83 a barrel.
The cost of insuring against corporate and sovereign defaults in Asia barely moved early on Wednesday, with the spread on the iTraxx Asia ex-Japan investment-grade index holding steady.