"Positive news in the form of a bigger than forecast rise in February German ZEW investor confidence helped to shore up market sentiment although perhaps the main message here is one of German outperformance rather than eurozone recovery," analysts at Credit Agricole CIB in Hong Kong said in a research note.

Looking ahead, traders are concerned about political developments in Italy. An election this weekend could result in a split parliament, making it difficult for a coalition government to push through unpopular economic reforms.

"The eurozone is going to be a distraction throughout the year. There will be good results. And you will have bad results," said Evan Lucas, market strategist at IG Markets in Melbourne.

Among individual stocks, Australia's Woodside Petroleum rose 3.1 percent after lifting its full year net profit. BHP Billiton, the world's largest mining company, fell 1.1 percent after announcing its chief executive Marius Kloppers, will retire in May. Kloppers will be replaced on May 10 by the chief executive of BHP's non-ferrous metals division, Andrew Mackenzie.

Benchmark oil for April delivery was down 4 cents to $97.06 per barrel in electronic trading on the New York Mercantile Exchange. The March contract expires Wednesday. That contract rose 80 cents to finish at $96.66 per barrel on the Nymex on Tuesday.

In currencies, the euro rose slightly to $1.3417 from $1.3416 late Tuesday in New York. The dollar fell to 93.34 yen from 93.44 yen.

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