The euro slipped on Wednesday on nagging worries about festering euro zone debt problems despite a $1 trillion rescue package unveiled this week, which fueled a short-lived rally in global stocks.
Sterling held its overnight gains after Conservative party leader David Cameron took over as British prime minister after securing a power-sharing agreement between his center-right party and the smaller Liberal Democrats.
In Tokyo, the Nikkei average <.N225> edged up 0.5 percent, but gains were capped by continued foreign selling of Japanese stocks on concerns that the euro zone relief package did little to resolve the region's longer-term debt problems.
Since the start of this month, foreigners have really been selling Japanese stocks, partly because Japanese markets were closed for holidays and foreign markets fell during that time, and partly because the Greek debt crisis really worsened, said Hideyuki Ishiguro, a strategist at Okasan Securities.
At this point, I don't think a lot of this money is flowing into other Asian share markets. It's probably going into U.S. Treasury bonds and gold as part of a shift from riskier assets.
Orders for Japanese stocks placed through 10 foreign securities houses before the start of trade on Wednesday showed selling for a fifth straight day.
MSCI's index of Asia-Pacific shares outside Japan was little changed <.MIAPJ0000PUS>, a day after falling just over 1 percent, though most major markets in the region were weaker, following modest losses on Wall Street. <.N>
Benchmark indexes in Hong Kong <.HSI> and South Korea <.KS11> fell by as much as 0.6 percent, but Australia <.AXJO> advanced more than 1 percent as its federal budget boosted banks.
On Monday, the MSCI ex-Japan index climbed 3.6 percent -- its biggest single-day percentage gain since May 2009 -- fueled by hopes that the massive rescue package would prevent Greece's debt crisis from spreading to other countries in the euro zone and possibly sparking another global credit crunch.
But the global rally quickly fizzled on Tuesday as worries resurfaced that Greece and other heavily-indebted euro zone members will not be able to deliver on promises of deep spending cuts.
The euro was trading around $1.2636, down 0.2 percent from late U.S. trade, but off a 14-month low of $1.2510 hit last week.
One near-term downside target for the euro may be around $1.2580, near Friday's low, one trader said.
Sterling hovered near $1.4898 after rising above $1.5000 on Tuesday.
The Conservatives and the smaller Liberal Democrat party agreed on Wednesday to form Britain's first coalition government since 1945, ending uncertainty over who would take power after inconclusive elections last week.
U.S. crude futures fell almost 0.6 percent to above $75.96 a barrel, while spot gold fell $4.85 an ounce to $1,227.2.
U.S. gold futures hit an all-time high above $1,230 on Tuesday as investors continued to worry about Europe's debt problems, boosting gold's appeal as a safe haven in times of market turmoil.
(Additional reporting by Elaine Lies in TOKYO; Editing by Kim Coghill)