By ANDREA TRYPHONIDES

LONDON—European stocks opened slightly higher Tuesday, buoyed by hopes that Greece's New Democracy party will come to a coalition agreement with the socialist Pasok party, but Spain's soaring government bond yields will likely limit gains.
The U.K.'s FTSE 100 Index opened 0.3% higher, Germany's DAX gained 0.1% and France's CAC-40 rose 0.2%.
Borrowing costs in Spain surged Monday with yields hitting 7.13% on 10-year Spanish government bonds, exceeding the 7% point at which other troubled European countries—Greece, Portugal and Ireland—lost access to the debt markets.
In fact, yields on Spanish debt skyrocketed to the point where its 10-year debt was yielding more than Irish 10-year bonds. In addition, the ratio of past-due loans held by Spanish banks jumped to an 18-year high according to data released Monday, further evidence of debt problems in the country.
This overshadowed the New Democracy party's narrow victory in Greece's election Sunday, which eased fears the country would face an abrupt and unruly exit from the euro zone.
"The lack of progress to resolve Europe's crisis threatens to inflict much more severe damage onto global markets," said Crédit Agricole Corporate & Investment Bank in a note. "Against this background the European summit at the end of the week will be particularly important but the scope for disappointment remains high."
Meanwhile, the Group of 20 leaders' summit enters its second day Tuesday. While there has been some strong rhetoric from many of the leaders, there have been no concrete announcements, which has left traders feeling exasperated.
"Whilst Spanish and Italian yields steadily make new highs, trader concerns are being confounded by the apparent idleness at the G-20," said Jonathan Sudaria, dealer at Capital Spreads. "What was hoped would be a definitive meeting of the world's most powerful economies devising a solution to the slowing global growth story, unfortunately looks to be plagued with the same sort of inertia that led euro-zone policy makers to stand by as the crisis mushroomed."
On the economic calendar, investors will be interested in the German ZEW survey, scheduled for release at 0500 ET. Spanish debt will be in focus too as a 12- and 18-month bill auction takes place, targeting volume of €2 billion ($2.52 billion) to €3 billion.
U.S. stocks swung between gains and losses as Spanish borrowing costs rose to a record high on Monday. The Dow Jones Industrial Average fell 0.2% to 12741.82. The S&P 500 index increased 0.1% to 1344.78 and the Nasdaq Composite increased 0.8% to 2895.33.
Asian shares posted modest losses Tuesday as investors shifted their attention back to Spain's financial woes, overriding Monday's postelection cheer from Greek election results.
Japan's Nikkei Average was 0.4% down, South Korea's Kospi edged 0.2% lower, while Australia's S&P ASX 200 was 0.4% lower. In China, Hong Kong's Hang Seng Index was 0.4% lower and the China Shanghai Composite dropped 0.5%.
In foreign exchanges, the euro climbed Tuesday to $1.2609 from $1.2575 late Monday. The dollar gained 0.5% against the yen overnight to ¥79.12, before slipping back to ¥78.99.
Elsewhere, the August Nymex crude futures contract was down $0.34 at $83.26 a barrel and the August Brent futures contract was $0.15 lower at $95.90. Spot gold was up $2.50 at $1,629.40 a troy ounce. The September bund contract was down 0.08 at 142.56.
Write to Andrea Tryphonides at [email protected]