Asian shares rose on Tuesday and edged back toward a two-month peak hit last week, supported by investor expectations of an ongoing recovery in the world economy, and as tech stocks drew support from gains in U.S. peers.

The euro held its ground on Tuesday after rebounding from a three-week low against the dollar, helped by an improvement in risk appetite following gains in U.S. stocks but still stymied by squabbling over Greece.

The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> rose 0.9 percent, clawing back in the direction of a two-month peak struck last week.

Market players are feeling a sense of reassurance about economic conditions, which look strong especially in emerging market countries, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

So stocks that have exposure to such markets are on solid footing, Akino said.

U.S. stocks rose on Monday, building on last week's strength, as the passage of a bill overhauling the healthcare system ended much of the uncertainty about the issue.

The S&P 500 <.SPX> rose half a percent on Monday, while the Nasdaq <.IXIC> gained 0.9 percent.

The biggest risk for Asian stocks would be concerns about a renewed slowdown of the U.S. economy, but such worries are unlikely to emerge soon, especially with the Federal Reserve unlikely to raise rates within the next few months, Akino said.

For the time being, I think equities will stay on a rising trend with market players focusing on corporate earnings.

South Korean shares rose 0.5 percent <.KS11>, led by technology and cars including Samsung Electronics <005930.KS> and Hyundai Motor <005380.KS>.

Taiwan stocks inched up 0.3 percent <.TWII>, while Japan's benchmark Nikkei 225 average slipped 0.3 percent <.N225>, with recent gainers such as Canon Inc <7751.T> losing steam and investors cautiously watching moves in the yen.

Hong Kong shares climbed 1.1 percent <.HSI> and China's benchmark Shanghai Composite Index <.SSEC> dipped 0.3 percent after hitting a three-week closing level high on Monday.

TOUGH YEN MAY CAUSE DISCOMFORT

In Japan, Toshiba <6502.T> jumped 3.6 percent after the Nikkei business daily reported Toshiba and Microsoft Chairman Bill Gates would team up to develop a nuclear reactor that can run for 100 years without refueling.

Akino said one worry for Tokyo shares was the resilience in the yen after the Bank of Japan decided last week to double the amount of its three-month fixed rate operation to 20 trillion yen ($222 billion).

Market players say the BOJ likely decided on the expansion of its fixed-rate fund supply scheme to help curb rises in the yen.

Shares of Japanese exporters could come under pressure if concerns about Greece's fiscal woes flare up again and pushes the yen higher against the euro, Akino said.

The euro held steady against the dollar at $1.3552, and edged up 0.2 percent versus the yen to 122.42 yen.

Continuing disagreement between Germany and its EU partners over financial support for debt-laden Greece was likely to weigh on the euro leading into a summit at the end of the week.

Oil dipped 0.2 percent, while gold edged up 0.2 percent after hitting a near one-month low on Monday.

U.S. Treasuries were little changed, holding gains from the previous day but capped ahead of a string of auctions this week.

The benchmark 10-year Treasury note dipped about 1/32 in price to yield 3.666 percent.

The two-year/10-year yield spread on U.S. Treasuries was little changed around 269 basis points, having pulled away from 291 basis points reached a month ago, the widest since the two-year maturity first started trading in the 1970s.

(Editing by Jan Dahinten)

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