Asian shares recover some of their losses

Stock markets in Asia rose, recovering some of the ground lost on Monday when markets were hit by worries over Greece.

In Japan, the Nikkei 225 share index closed up 0.63% at 20,235.73 points.

EU leaders earlier warned Greeks that rejecting creditors' proposals in a snap referendum called for Sunday would mean leaving the euro.

Talks between Greece and its creditors broke down last week, leading to Greek banks having to shut this week.

On Monday, Standard & Poor's ratings agency downgraded Greece's credit rating one notch further into junk territory.

The agency also said there was a 50% chance Greece would exit the eurozone.

Greek Prime Minister Alexis Tsipras has defended his government's handling of the country's debt crisis however and said the result of Sunday's referendum on the latest bailout proposals would signal further negotiations.

In Australia, the benchmark S&P/ASX 200 closed up 0.7% at 5,459.00 after closing down more than 2% on Monday.

In South Korea, the benchmark Kospi also closed up 0.7% at 2,074.20 after suffering its biggest daily percentage fall since late May on Monday.

Official data out in South Korea showed that industrial output fell 1.3% in May compared with April. The May numbers mark the third consecutive monthly drop in manufacturing activity as the country continues to struggle with slower demand for its exports.

The benchmark Shanghai Composite traded erratically for much of Tuesday, falling as low as 5% at one point, but eventually closing up 5.53% at 4,277.22.

The index saw a volatile day of trade on Monday, too, when shares fell more than 7% at one point, despite a surprise rate cut by the central bank on Saturday.

Chris Weston of IG Markets said China was always a "different beast".

"I see no other way but to trade China ultra-short term as the various indices could be 5% higher or lower if you hold onto a position for more than 30 minutes," he said in a note.

"Talk of putting a halt to the IPO (initial public offering) process helped spur some buying yesterday," he said, "and it will certainly help mitigate the prospect of traders selling existing stock holdings to take part in the IPO process if it plays out."

He added there had also been talk of using the country's endowment pension fund to invest in stocks, as well as cutting stamp duty.

In Hong Kong, the benchmark Hang Seng index closed up 1.1% at 26,250.03.

While some economists had predicted Asian markets would quickly recover from Monday's losses, others pointed to longer term concerns.

"It is not a default of Greek debt that is worrying the market, but the future of the euro," David Kuo of the Motley Fool in Singapore told the BBC.

"The Greece saga has exposed unwelcome fault lines in the euro - when you roll an olive in mud you get a muddy olive."

However Mr Kuo said the "current mess" would eventually get cleared up. "It might take a while, but sooner or later it will get cleared up.

"If central banks ever want to replace the lost billions from a Greek debt default, they could do so if they wanted.

"They just have to fire up the printing press and print more money, again.

"And that is worrying," he added.