Shares slip as crude resumes drop

Spreadbetters predicted European bourses would follow Asia lower, with IG predicting Britain's FTSE 100 would start trading down 0.6 percent. Germany's DAX was seen falling 0.7 percent, and France's CAC 40 was expected to open down 0.6 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was down about 1 percent.

U.S. crude oil fell 1.8 percent to $31.05 a barrel after skidding as much as 7 percent overnight, pressured by weak economic data from China, a U.S. forecast for mild weather and doubts that suppliers would be able to agree on steps to address the global supply glut.

Despite the declines, U.S. crude is still nearly 19 percent above the more than 12-year low of $26.19 hit in mid-January.

"(Prices) have just come back to reality a bit, although they are holding water above $30 a barrel," said Ben Le Brun, market analyst at Sydney's OptionsXpress, pointing to concern over rising oil supplies and weaker economic data.

Brent April crude futures slipped 1.6 percent to $33.69.

Oil faced fresh pressure after Chinese January manufacturing data on Monday showed activity contracted at the fastest pace since 2012.

Despite the weak factory reading, Chinese shares bucked regional softness and rebounded on Tuesday, led by small-cap shares. The Shanghai Composite Index was up 1.8 percent, while the bluechip CSI300 index added 1.8 percent.

"In a bear market, investors would use any rebound to cut equity holdings, and that has been the trading pattern recently," said Zeng Yan, an analyst at Zhongtai Securities.

"There are no changes in fundamentals: yuan depreciation concerns are still there, the economy remains in bad shape, and market liquidity tends to be tight."

The Australian dollar was down about 0.5 percent at $0.7075, though it held above its recent seven-year trough of $0.6827.

As expected, the Reserve Bank of Australia held interest rates steady at a record low of 2.0 percent. Although the bank was hopeful on growth prospects, it reiterated that there was scope for a further cut if needed to support the economy.

The greenback slipped about 0.3 percent against its Japanese counterpart to 120.65 yen, but remained underpinned by the BOJ's surprise rate move on Friday.

Markets were little fazed by results of Iowa's Republican presidential nominating primary election, in which U.S. Senator Ted Cruz beat billionaire Donald Trump. On the Democratic side, former Secretary of State Hillary Clinton was in a virtual tie with rival Bernie Sanders.

S&P 500 e-mini futures were down 0.4 percent, mostly tracking oil prices.

Wall Street marked modest losses on Monday, after January surveys of global factory activity on Monday showed the new year began much as the old one ended, with too much capacity chasing too little demand.

Global manufacturing expansion accelerated slightly but remained weak at the start of 2016 as faster growth in developed markets failed to offset a contraction in emerging economies.

U.S. economic data showed manufacturing activity contracted in January for a fourth straight month as factories grappled with a strong dollar and lower oil prices forced energy firms to further cut spending, but the pace of the decline appeared to be slowing.

The euro was up about 0.1 percent at $1.0899, mired in recent ranges, its gains limited by the disappointing euro zone manufacturing data as well as comments from European Central Bank President Mario Draghi.

The central bank head stressed the risks facing the euro zone and reiterated the ECB was ready to review its monetary policy stance in early March.