Greek turmoil sends euro and global shares lower

LONDON (Reuters) - World shares fell and the euro touched a fresh four-month low on Wednesday, as investors fled riskier assets on fears a Greek exit from the euro zone was more likely after talks to form a new government failed, forcing another round of elections.

Greek political leaders will try to agree a caretaker government in Athens later on Wednesday to see them through to the expected vote on June 17 - a poll that leftists opposed to the terms of an EU bailout could win.

Safe havens such as the dollar <.DXY>, yen and German and U.S. Treasury bonds all gained, while bonds for struggling European nations like Spain and Italy, seen as most at risk if Greece leaves the European Monetary Union (EMU), rose further.

"The re-weighted probability of Greece leaving EMU has led to a sharp widening of government bond spreads, suggesting that long-term capital is leaving the periphery of Europe," Morgan Stanley said in a note to clients.

Spanish and Italian 10-year bond yields were up more than 10 basis points to 6.51 percent and 6.15 percent respectively.

The euro meanwhile fell to a low of $1.2683, its lowest level since mid-January.

The unknown impact of a Greek exit from the euro zone also sent tremors through Asian share markets, causing the biggest one-day drop in six months in MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS>, down 3.3 percent to a new four-month low.

The FTSE Eurofirst <.FTEU3> index of top European shares opened down 0.8 percent at a fresh 2012 low of 989.35 points.

(Reporting by Richard Hubbard; Editing by David Holmes)