By Agence France-Presse
Even as the selling pressured abated, investors kept a nervous eye on Ankara after Monday's bloodletting which saw the lira hit record lows and equity markets go into free-fall on concerns Turkey's financial crisis could spread globally.
"The Turkish lira has finally found some support after two days of intense selling that triggered panic across the markets," said Fawad Razaqzada, market analyst at Forex.com, adding that the lira had clawed back most of the previous day's losses.
'A long way to go'
"But it has a long way to go following its 13 percent or so drop on Friday and its previous declines," he said.
In European deals, the Turkish unit advanced to 6.40 to the dollar and 7.26 to the euro, which was well off the all-time record lows seen the previous day, after Turkey's central bank vowed to boost liquidity.
In Europe, London and Paris equities were down at the close, while Frankfurt was flat.
In New York, however, the Dow, S&P 500 and the Nasdaq all posted gains of at least half a percent, with analysts reporting that investors were less worried about Turkey's crisis affecting other emerging economies.
The improving exchange rate of the Turkish currency helped ease fears for other emerging currencies which have become entangled with the lira's woes.
But the Indian rupee still fell to a record low of 70 to the dollar on Tuesday.
"Turkey's central bank managed to calm down the currency markets for the time being by committing to provide liquidity for the embattled Turkish lira," said Fiona Cincotta, senior market analyst at traders City Index.
"The lira even managed to claw back some lost ground... allowing stock and commodity markets to recover."
But concerns remain about how the crisis will pan out, with Turkish President Recep Tayyip Erdogan in a combative mood, accusing Washington of plotting against his country, and calling for a boycott of US electronic goods.
On the Milan stock exchange, shares in motorway operator Atlantia were sharply lower after a bridge collapsed on the A10 Italian motorway which the company runs.
They were down by around 5.5 percent in late trading, having earlier been suspended temporarily when their drop exceeded the permitted 10-percent threshold.
Shares of Tesla Motors dropped 2.5 percent after the company said its board had appointed a special committee to formally consider Chief Executive Elon Musk's proposal to take the electric automaker private.
The company has continued to face questions over Musk's comments on the initiative, including a claim that he had funding "secured" for a deal when he initially announced the idea on Twitter last week.
In Asia, Shanghai and Hong Kong equities sank into the red on downbeat Chinese data, which also weighed on commodities.
Key figures around 2040 GMT
Dollar/Turkish lira: DOWN at 6.40 lira from 6.88 lira late Monday
Euro/Turkish lira: DOWN at 7.26 lira from 7.87 lira
Euro/dollar: DOWN at $1.1345 from $1.1410
Pound/dollar: DOWN at $1.2714 from $1.2771
Dollar/yen: UP at 111.21 yen from 110.70 yen
New York - Dow Jones: UP 0.5 percent at 25,299.92 (close)
New York - S&P 500: UP 0.6 percent at 2,839.96 (close)
New York - Nasdaq: UP 0.7 percent at 7,870.89 (close)
London - FTSE 100: DOWN 0.4 percent at 7,611.64 (close)
Frankfurt - DAX 30: FLAT at 12,358.87 (close)
Paris - CAC 40: DOWN 0.2 percent at 5,403.41 (close)
EURO STOXX 50: UP 0.1 percent at 3,412.16 (close)
Tokyo - Nikkei 225: UP 2.3 percent at 22,356.08 (close)
Hong Kong - Hang Seng: DOWN 0.7 percent at 27,752.93 (close)
Shanghai - Composite: DOWN 0.2 percent at 2,780.96 (close)
Oil - Brent Crude: DOWN 15 cents at $72.46 per barrel
Oil - West Texas Intermediate: DOWN 16 cents at $67.04 per barrel