Asian stocks, euro fall after Fed offers no new stimulus

SINGAPORE (Reuters) - Asian shares drifted lower and the euro floundered near an 11-month low on Wednesday after the Federal Reserve failed to take any new steps to stimulate growth and offset the chilling effects of Europe's still-unresolved debt crisis.

Wall Street stocks fell after the U.S. central bank's final policy meeting of the year, at which the Fed noted modest improvement in the U.S. economy but added that market turbulence in the face of Europe's woes posed a big risk.

"Investors continue to avoid risk as they look to possible sovereign debt downgrades in Europe," said Hiroichi Nishi, equity general manager at SMBC Nikko Securities in Tokyo.

Japan's Nikkei share average <.N225> and MSCI's broadest index of Asia Pacific shares outside Japan both fell 0.6 percent, with the growth sensitive materials sector worst hit for a second successive day.

The euro fell as far as $1.30090, its lowest since mid-January and nearly 20 cents below its 2011 high in May, before steadying at around $1.3037.

The European leaders agreed to impose stricter budget discipline on euro zone members at a summit last week, but markets have since hardened to the view that the measures agreed do not go far enough to resolve the two-year-old debt crisis.

That view was further cemented on Tuesday, when German Chancellor Angela Merkel rejected talk of raising the funding limit of a planned permanent bailout fund to backstop the currency bloc above 500 billion euros.

"European institutions continue to hammer the point of what they are not willing to do," said Kit Juckes, head of foreign exchange research at Societe Generale. "The market is driving down the point of how little they are willing to risk in a deleveraged financial system, and this ahead of the holidays."

U.S. crude eased a little to fall back below $100 a barrel, after rallying 2 percent in the previous session.

Oil prices are currently being pulled and pushed between fears of slackening economic growth that would tend to weaken prices and tensions between Iran and the West that have raised concerns about supply disruptions. Such disruptions would drive energy costs higher.

Gold was steady around $1,633 an ounce after falling 2.5 percent on Tuesday as the dollar rallied, making commodities priced in the U.S. currency more expensive for many buyers.

(Additional reporting by Mari Saito in Tokyo and Ian Chua in Sydney; Editing by Yoko Nishikawa)

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