SYDNEY: Asian shares fell on Tuesday and the euro struggled near 6-1/2 month lows as early elections loomed in Italy, although a revival in diplomatic talks with North Korea and a retreat in oil prices supported sentiment.
European shares looked set to extend losses, spreadbetters showed, as investors feared Italy’s election campaign could focus on the country’s membership of European institutions after the anti-establishment 5-Star and League parties abandoned plans to form a government.
FTSE futures FFIc1 slipped 0.5 percent while Eurostoxx 50 futures STXEc1 eased 0.1 percent.
Adding to the uncertainty, Spanish Prime Minister Mariano Rajoy will face a vote of confidence in his leadership on Friday.
All that hit risk appetite, sending MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down 0.4 percent after three consecutive sessions of gains.
Japan’s Nikkei .N225 skidded 0.6 percent. Chinese shares were in the red, too, with the blue-chip .CSI300 down 0.6 percent and Hong Kong’s Hang Seng index .HSI off 0.7 percent.
Liquidity was relatively thin with public holidays in Singapore, Malaysia, Indonesia and Thailand.
“The market has turned its focus to the continuing political situation in Italy,” said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.
“This should keep the risk trades pressured to the downside,” Twidale added.
