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Global bourses rose on Tuesday amid signs of easing tensions on the Korean peninsula but the euro dropped after Portugal became the latest European country to be warned of a possible credit rating downgrade.

In Europe, the main boards were all reading higher.

Scarce economic data and severe winter weather in Europe ahead of the Christmas break are keeping trading volumes low. But investors have been watching North Korea’s apparent decision to avoid confrontation with South Korea despite accusing it of being “reckless” with military drills.

That has helped shore up investors’ appetite for risk — when geopolitical worries are on the rise, investors look for safe havens to park their cash.

The euro initially garnered support from the Korean situation but early gains were mostly wiped out after Moody’s Investor Services warned Portugal could have its A1 rating reduced. It cited uncertainties over its “longer-term economic vitality” and concerns over the country’s ability to access capital markets “at a sustainable price.”

The euro was up 0.2 percent on the day at $1.3151. Just before the Moody’s warning, it had been trading as high as $1.32.

Portugal is widely thought to be the most financially imperiled euro zone country now that Ireland and Greece have been bailed out by their partners in the single currency bloc and the International Monetary Fund.

Though concerns that Europe’s debt crisis will claim another victim have diminished over the past few weeks, the ratings agencies continue to voice their worries. Portugal, Spain and Greece have been all been warned by Moody’s that they could have their ratings cut, while Ireland’s had its slashed by a massive five notches. Even Belgium was dragged into the spotlight when rival agency Standard and Poor’s warned about its debt.

“Credit rating agencies are, as usual, way behind the curve but are responding to jittery bond markets,” said Jeremy Batstone-Carr, director of private client research at Charles Stanley.

In Asia, Japan’s Nikkei 225 closed up 1.5 percent. Hong Kong’s Hang Seng index added 1.6 percent. South Korea’s Kospi advanced 0.8 percent and Australia’s S&P/ASX 200 gained 0.8 percent. China’s Shanghai Composite Index jumped 1.8 percent.

World Markets Roundup

AP, JG