Gains on Wall Street helped most European markets close higher Tuesday despite new ratings downgrades of Portugal and Greece and more bad news from Japan, where authorities struggled to contain radiation from a nuclear power plant.
Sentiment in Europe had been fragile earlier after losses across Asia, as leaks of highly toxic plutonium from Japan's Fukushima Dai-ichi power plant suggested the fallout may be worse than previously expected.
The plant was crippled when a towering tsunami _ spawned by the biggest earthquake ever to strike Japan _ barreled into it on March 11. The Japanese government conceded it has struggled to stabilize the reactor.
News was not better in Europe, which has been struggling with a debt crisis for over a year. On Tuesday, Standard & Poor's downgraded Portugal's sovereign debt rating to just one notch above junk, making it even less likely that the country will manage to avoid a bailout in coming months.
Meanwhile, the agency also cut Greece's rating further into junk status and said it was likely the country would need more bailout loans once its current rescue package expires in 2013.
Despite the news and losses across most of Asia, European indexes mostly managed to eke out gains by the close.
Britain's FTSE ended 0.5 percent higher at 5,932.17, Germany's DAX was down less than 0.1 percent to 6,934.44 and France's CAC-40 rose 0.3 percent to 3,987.80.
Wall Street was the catalyst, despite downbeat economics news in the U.S. The Dow was up 0.5 percent at 12,255.36 and the S&P 500 was 0.4 percent higher at 1,314.73.
A report showed that home prices fell in 19 of the 20 large U.S. cities tracked by the S&P/Case-Shiller index. Separately, the Conference Board said its confidence index dropped more than expected to 63.4 from 72 in February and reported that inflation expectations had risen.
Investors refused to be scared off, however, perhaps because of a pickup in corporate deal-making in recent months.
German industrial conglomerate Siemens AG on Tuesday said it would list its Osram lighting unit. Home Depot Inc. announced it would buy $1 billion of its own stock with cash from selling bonds, and Volvo Cars said it would hire up to 1,200 additional workers over the next 12 months.
Market sentiment is expected to fluctuate, however, ahead of crucial U.S. jobs figures on Friday. The nonfarm payrolls report often sets the market tone for days and is of particular interest this month amid signs that the Federal Reserve is gauging when to tighten its super-loose monetary policy.
In currency markets, the euro lost some ground after the S&P downgrades, to trade at $1.4085 from $1.4113 earlier in the day.
Analysts warn the euro could be affected by bank stress tests in Ireland, due on Thursday. Ireland is unable to cope with the massive losses at its banking sector, the size of which is due to be revealed in the tests. The government is trying to get private creditors to take on some of the losses or ease its bailout terms, though no deals have yet been reached.
In Asia, Japan's benchmark Nikkei 225 index closed down 0.2 percent at 9,459.08. Shares in Japanese companies expecting to play a major role in rebuilding the country's quake-shattered northeast drooped as the government remained preoccupied with the nuclear crisis. Nishimatsu Construction Co. Ltd. plunged 3 percent and Hitachi Construction Machinery Co. Ltd. was down 1.7 percent.
The dollar was up at 82.39 yen from 81.70 yen earlier in the day.
China's Shanghai Composite Index slipped 0.9 percent and Hong Kong's Hang Seng index was narrowly down.
South Korea's Kospi was 0.8 percent higher and Australia's S&P/ASX 200 gained 0.5 percent. Energy Resources of Australia Ltd., which produces uranium, dropped 3.7 percent amid fears Japan's nuclear crisis will reduce demand for the radioactive element used in nuclear fuel and weapons.
Oil prices, meanwhile, rose back above $104 a barrel thanks to the recover in the stock markets. Crude prices had dropped so far this week on evidence that Libyan rebels were gaining ground against the forces of Moammar Gadhafi. They have vowed to restart crude exports from the OPEC nation.
By late afternoon in London, benchmark crude for May delivery was up 66 cents to $104.64 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.42 on Monday to settle at $103.98.
Pamela Sampson in Bangkok contributed to this report.