By Chikako Mogi
TOKYO (Reuters) - Shares, precious metals and oil fell and the euro remained pressured on Wednesday as Greece struggled to form a government after an election that saw incumbent parties punished, heightening the risk that a hard-won bailout deal could be scrapped.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> shed 1.4 percent to its lowest in more than three months, with energy <.MIAPJEN00PUS>, materials <.MIAPJMT00PUS> and growth sensitive industrials <.MIAPJIN00PUS> leading the declines.
Resources-heavy Australian shares <.AXJO> plunged 1 percent to a three-week low as oil, precious metals and copper slid.
European shares will likely edge up after a mauling on Tuesday, with financial spreadbetters predicting that major European markets <.FTSE> <.FCHI> <.GDAXI> would open 0.6 percent higher. U.S. stock futures were down 0.3 percent. <.EU> <.L> <.N>
"This Greece political uncertainty has the potential to derail the risk rally we have seen this year," said Stan Shamu, strategist at IG Markets.
Radical leftist Alexis Tsipras meets the leaders of Greece's mainstream parties on Wednesday to try to form a coalition government, an effort seen as doomed after he demanded that pledges made in exchange for a European Union/International Monetary Fund rescue package be torn up.
Officials estimate Greece could run out of money as soon as next month if it does not stick to the aid package terms, which kept the country solvent and in the single currency bloc.
A broad measure of Greek stocks <.ATG> dropped 3.6 percent to close at its lowest level in almost 20 years on Tuesday, while European shares sank to a four-month closing low.
Japan's Nikkei stock average <.N225> slid 1.4 percent on Wednesday, weighed partly by the yen's firmness against the dollar and the euro hitting exporters. <.T>
COMMODITIES HIT
Investors shunned commodity-linked currencies, sending the Australian dollar down to a fresh four-month low of$1.0052. The euro fell 0.3 percent at $1.2969, not far from a three-month low of $1.2955 reached on Monday.
"People are becoming too pessimistic about how they are going to resolve it and this sentiment will continue to be bearish for commodities," said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
Gold, which is often seen as a safe haven, was pulled lower by the euro's weakness given bullion's close correlation with the single currency.
Spot gold lost more than 1 percent to a four-month low of $1,586.74 an ounce, extending a 2-percent slide from the previous session, dragging down spot silver below $29 an ounce for the first time in nearly four months.
"'Risk off' sentiment is so prevailing that even gold is sold in tandem with other risk assets while the dollar is bought, and this risk aversion is also behind silver's plunge," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo.
Gold may see more downside after its 55-day moving average crossed below the 200-day moving average in mid-April - interpreted by technical analysts as signaling a downward trend - for the first time since February 2009.
Oil eased, with Brent June crude down 0.4 percent at $112.29 a barrel, after falling to a low of $110.53 on Tuesday. U.S. June crude eased 0.5 percent at $96.52 a barrel, still off Tuesday's low of $95.52.
Copper fell 0.5 percent to $8,056 a metric tonne.
EUROPE EYES TWIN AIMS
With Sunday's elections in France and Greece handing victory to anti-austerity camps, concerns were mounting for a further delay in fiscal reforms seen as vital to refinancing highly indebted euro zone members.
Europe appears to be moving towards amending strict fiscal goals in exchange for growth-oriented policies, because tough austerity steps risk choking already faltering growth and undermining the unified response to the debt crisis.
European Union countries must find ways to boost growth at the same time as putting public finances in order, and EU leaders will meet on May 23 to discuss how to achieve these twin aims, top EU officials said on Tuesday.
"You need to separate the issue of Greece which is facing a funding crisis and countries like France which is not, and the markets are now saying both fiscal austerity and growth policies are necessary, not one or the other, to ride out the debt crisis," said Naohiro Niimura, a partner at Tokyo-based research and consulting firm Market Risk Advisory Co.
"Market sentiment will have to be bearish while Greece's response to the EU agreement remains unclear. Equities and energy markets, which had gained markedly since the start of the year will likely come under intensifying selling pressures as investors seek to wind down their long positions when risks rise of Greece departing from the euro and triggering a credit contraction," he said.
Safe haven assets continued to draw strong bids.
U.S. Treasuries firmed in Asia on Wednesday, with the benchmark 10-year note yielding 1.8297 percent, compared with 1.8454 percent in late U.S. trade. U.S. yields briefly dipped below 1.82 percent on Tuesday to their lowest since early February, while benchmark German yields fell to a record low of 1.533 percent on Tuesday.
A broad market slide dampened sentiment in Asian credit markets, pushing the spread on the iTraxx Asia ex-Japan investment-grade index wider by 6 basis points.
(Additional reporting by Miranda Maxwell in Melbourne, Florence Tan in Singapore and Reuters FX analyst Krishna Kumar in Sydney; Editing by Alex Richardson)
