PARIS (AP) — European markets pulled back from early gains Monday as the initial relief over new governments in Greece and Italy gave way to the reality that those countries still face tremendous obstacles.

Technocrats have taken over in both Athens and Rome and have promised to institute the reforms required to keep their economies afloat. In Greece, Lucas Papademos must persuade his country's creditors to hand over the next euro8 billion installment of the bailout that will keep it from defaulting. Many Greeks have fought the reforms demanded by creditors, protesting in the streets and making the country nearly ungovernable at times.

In Italy, Mario Monti needs to convince investors that a well-managed country can slash its debts and restart growth. Monti seemed off to a good start Monday — the morning after he was installed and before he had a chance to do anything — when Italy's bond yields dropped significantly in early trading.

They soon edged back up, however, as investors remained cautious about the country's huge challenges ahead. The key 10-year borrowing rate was at 6.4 percent, down from last week's worrying highs above 7 percent but still more than three times what Germany pays to borrow.

That caution extended to stock markets, where European indexes lost early gains to trade lower by early afternoon. In France, the CAC-40 fell 0.5 percent to 3,135, while Germany's DAX was down 0.1 percent at 6,051. The FTSE index of leading British shares fell 0.5 percent to 5,516.16. The euro, meanwhile, was down 0.4 percent to $1.3710.

Ahead of the U.S. open, S&P futures were down 0.1 percent at 1,261. Dow futures, however, edged up 0.1 percent to 12,123.

While investors are clearly relieved that experienced economists are in charge in two of Europe's most fragile countries, reliable leadership is only the beginning: Reducing Italy's euro1.9 trillion ($2.6 billion) mountain of debt in an era of stagnant growth is still a monumental task.

"Italy and the eurozone are still faced with an uphill battle to win back credibility," said Jane Foley, an analyst with Rabobank. "Most worrying is that some of those battle lines have crossed over into France signifying that contagion is rattling the very core of EMU (European Monetary Union)."

As has typically been the case in recent weeks, those concerns were overshadowing some good news from Asia: Japan's economy grew for the first time in four quarters, the government said Monday, with an annualized rate of 6 percent.

Earlier, Asian markets were up on those figures. Japan's Nikkei 225 index added 1.1 percent to close at 8,603.70. Hong Kong's Hang Seng surged 2 percent to 19,508.18 and South Korea's Kospi climbed 2.1 percent to 1,902.81

On mainland China, the benchmark Shanghai Composite Index gained 1.9 percent to 2,528.71 while the smaller Shenzhen Composite Index jumped 2.5 percent to 1,083.04. Benchmarks in Singapore, Australia, and Indonesia were also higher.

The good news about Japan's economy had buoyed energy prices earlier in the day since growth means an increase in demand for oil. But once the focus turned back to Europe's problems, oil fell 29 cents to $98.70.