Concerns about a Greek bailout, early Italian elections and comments by the European Central Bank chief about the need for continued stimulus all kept the euro under pressure on Tuesday.

European geopolitical fears sapped risk appetite, weighing on Asian stocks and lifting safe havens, including the yen and gold, though trading was thin with several markets closed for holidays.

The euro slid 0.3 per cent to $1.1129 in its fourth session of declines.

James Woods, global investment analyst at Rivkin Securities in Sydney, attributed most of the currency's decline on Tuesday to a German press report saying Athens may opt out of its next bailout payment if creditors cannot strike a debt relief deal.

“The bailout payments are necessary to meet existing debt repayments due in July, so if Greece were to forgo this bailout payment the probability of a default would spike, reopening the discussion around a Grexit from the Euro zone,” Woods said.

However, he cautioned against reading “too much into it" without more details or confirmation, adding it was unlikely Greece would forego the bailout payment at this stage.

Euro zone finance ministers failed to agree with the International Monetary Fund on Greek debt relief or to release new loans to Athens last week, but did come close enough to aim to do both at their June meeting.

Comments by former Italian Prime Minister Matteo Renzi on Sunday in favour of holding an election at the same time as Germany's in September also pulled the euro lower.

So did a statement by European Central Bank President Mario Draghi reiterating the need for “substantial” stimulus given subdued inflation.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.25 per cent with US and British markets closed on Monday.

China, Hong Kong and Taiwan markets are closed for holidays on Tuesday.

Japan's Nikkei dropped 0.3 per cent, dragged down by a stronger yen.

South Korea's KOSPI fell 0.5 per cent as investors took profits following the market's record-breaking rally this month.

European blue-chip stocks fell 0.2 per cent on Monday, with Italy's banking index sliding 3.4 per cent, its biggest loss in nearly four months, after two lenders sought help to cover a capital shortfall.

Sterling retreated 0.15 per cent to $1.2818 after British Prime Minister Theresa May's lead over the opposition Labour Party dropped to 6 percentage points in the latest poll to show a tightening race since the Manchester bombing and a U-turn over social care plans.

The dollar declined 0.4 per cent to 110.815 yen.

Japanese labour demand rose to its strongest level in 40 years in April, and retail sales for the month beat expectations to rise 3.2 per cent from a year earlier.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, however, advanced 0.2 per cent to 97.659.

Markets are also awaiting economic indicators including French first quarter gross domestic product, German inflation data for May, and US inflation for April later in the session.

In commodities, oil prices retreated, as concerns lingered about whether the extension of output cuts by OPEC and other producing countries will be enough to support prices.

US crude futures slipped about 0.1 per cent to $49.77 a barrel.

Global benchmark Brent fell 0.4 per cent to $52.09.

Gold advanced 0.1 per cent to $1,268.34 an ounce.

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