European shares gained on Tuesday after UK bank Barclays beat profit forecasts, and the euro rose against the dollar as European finance ministers put more pressure on Greece to resolve its fiscal problems.

Greek borrowing costs, however, rose.

Oil and metal prices advanced, supported by a weaker U.S. currency, while investors showed more appetite for riskier assets.

World stocks measured in MSCI All-Country World Index put on 0.5 percent, backed by robust gains in Europe.

Europe's FTSEurofirst 300 rose 0.7 percent, with banks the leading risers as Barclays said it had started the year well after beating expectations with 2009 profits of over $18 billion. The bank's shares soared 6.5 percent.

In Asia, Japan's Nikkei average put on 0.2 percent.

The euro was up 0.5 percent at $1.3666 as euro zone states urged Athens to make a greater effort to deal with its fiscal problems, prompting short-term players to trim their short positions.

But many investors remained cautious about buying the single currency on uncertainty that debt problems in Greece will be resolved quickly.

The market had sold the euro up to their chins before the meeting (of finance ministers), and some people are moving to trim those positions, a senior trader for a Japanese bank said.

But the euro lacks its own buying factors. So this euro gain looks very fragile.

Euro zone states on Monday urged Greece to take further steps to control its budget deficit by mid-March if needed, but did not elaborate on last week's pledge to defend the country if market pressures spin out of control.

On Tuesday, Eurogroup Chairman Jean-Claude Juncker said Greece must step up efforts to cut its budget deficit and if Athens failed to convince its peers within the monetary union with its austerity measures, it faced the risk of sanctions.

European officials' tough stance on Greece's deficit weighed on the country's assets.

Greece's benchmark share index lost 1.4 percent, while the premium investors demand to hold Greek government bonds rather than German benchmark rose, widening by 17 basis points to 322 bps.

The key issue that is going to be hanging over Europe is what is going to be happening with Greece ... because there is still no resolution. The market desperately wants to have a clear line, said Justin Urquhart Stewart, director at Seven Investment Management.

Yields on benchmark 10-year Bunds were up 2 basis points to 3.216 percent, while those on 10-year Treasuries were up 2 basis points at 3.717 percent.

In commodity, crude prices rose 1 percent to near $79 a barrel, helped by the weaker dollar, while copper prices gained 2.1 percent.

The dollar fell against a basket of major currencies and was down 0.1 percent against the yen at 88.92.

(Additional reporting by Satomi Noguchi in Tokyo, and Harpreet Bhal and William James in London; editing by John Stonestreet)

Japan United kingdom Nikkei 225 Barclays