The pressure on riskier assets from oil prices also eased as Brent crude futures extended losses and slipped below the $124-a-barrel level, ending a surge that threatened to dampen the fragile economic recovery.

Markets expect European banks to borrow about 500 billion euros ($670 billion) of the cheap funds to be offered by the ECB on Wednesday, although forecasts range from 200 billion to 750 billion euros.

"The ECB's second 3-year (loan tender) is rapidly approaching, and it appears the market has priced in a take-up just below the previous 489 billion euro borrowed from the first long-term refinancing operation," Chris Tedder, research analyst at FOREX.com said in a note.

The euro edged up 0.2 percent to $1.3428, off a near three-month high of $1.3487 reached on Friday. The US dollar, meanwhile was slightly higher against the yen at 80.66 yen , but below a nine-month high of 81.66 yen hit on Monday.

The FTSEurofirst 300 index of top European shares opened barely changed at 1074.75, below a seven-month high hit last week before rising oil prices unnerved investors.

A solid session on Asian markets, helped by strong gains in Japan's Nikkei index pushed the MSCI world equity index up 0.27 percent to 331.72.