In Europe, the FTSE 100 index of leading British shares was down 16 points, or 0.3 percent, at 5,761.65 while Germany's DAX fell 21.29 points, or 0.3 percent, at 6,229.40. The CAC-40 in France was 8.19 points, or 0.2 percent, lower at 4,042.31.
Wall Street was also poised to trade lower at the open later — Dow futures were down 31 points, or 0.3 percent, at 10,921 while the broader Standard & Poor's 500 futures fell 3.9 points, or 0.3 percent, at 1,188.70.
On Monday, the Dow Jones industrial average closed above 11,000 — just — for the first time in a year and a half on investors' rising hopes about the economy, while the S&P 500 came within a point of hitting its own milestone of 1,200.
However, hopes that further gains may be due Tuesday were dented somewhat in an after-hours statement from Alcoa, which traditionally kicks off the quarterly earnings season in the US
Though Alcoa saw its first quarter loss narrow to $201 million from $497 million in the same period a year ago, the earnings statement failed to excite — with stocks having rallied sharply from their lows in March 2009, there are growing concerns in the markets that this results season may disappoint as the scope for cost-cutting has been largely exhausted and the global economic recovery remains subdued.
"The Dow may have posted a finish above the key 11,000 level last night but there's not much else around to cheer investors after Alcoa's earnings disappointed," said Ben Potter, research analyst at IG Markets.
Elsewhere, investors continued to keep a beady eye on developments in Greece following the weekend European Union agreement to extend the country enough credit to cover its needs for this year.
A successful debt issuance by the country Tuesday has raised hopes that confidence toward taking Greek may be returning — the euro1.2 billion issue of short-term Treasury bills was oversubscribed, meaning investors were willing to hold Greek debt on condition the returns are high.
Longer-term problems remain, although confirmation that euro zone governments would make euro30 billion in loans available to Greece at a beneficial interest rate has helped ease the country's near-term liquidity and funding issues. The borrowing cost to Greece would be around 5 percent for a three-year loan, over 2 percentage points lower than its market rates on Friday.
Greece has promised its partners that it will get a handle on its debt with deep budget cuts so it can reduce its budget deficit to 8.7 percent of national income this year from last year's 12.9 percent — whether the government can push through the austerity over the coming few years is another matter. Weak growth prospects and high debt leave some wondering how Greece can pay long-term.
"The panic is over but the crisis remains," said David Buik, markets analyst at BGC Partners.
For now though, Greece has won some respite. Whether it has to draw on the euro zone facility, which could be supplemented by a further euro15 billion of funds from the International Monetary Fund, depends heavily on how the bond markets react — crucially on whether the market rate falls toward the 5 percent being offered by the euro zone.
After Monday's big decline, Greek bond yields have flat-lined Tuesday above that rate — the two-year rate remains at 6 percent. Meanwhile, the euro, which advanced over 2 cents in the wake of the announcement was down 0.1 percent at $1.3568.
Earlier in Asia, Japan's Nikkei 225 fell 0.8 percent to 11,161.23, while Hong Kong's Hang Seng index dropped 0.2 percent to 22,103.53. Australia fell 0.7 percent while Malaysia slid 0.4 percent.
Investors in Asia are also keeping a close watch on currency developments in China after President Barack Obama urged Chinese Prime Minister Jintao Monday on the sidelines of a nuclear summit in Washington D.C. to allow greater yuan flexibility. For the rebalancing of the global economy to take place, the US will have to consume less while it builds up its savings rate. Meanwhile, countries that have saved lots of dollars, such as China, will need to start spending more to take up the slack left from lower US spending. A lower yuan would help that.
Crude oil prices fell Tuesday, with benchmark crude for May delivery down 74 cents to $83.60.
