Asian shares and other growth-linked assets fell on Tuesday as slowing economies in China and Europe and tension over Iran dampened sentiment, prompting investors to take profits from recent rallies that had been driven by ample liquidity.

China's lowering of its growth target and data pointing to Europe possibly slipping back into recession eroded the optimism that had been setting the tone for global markets since the European Central Bank's first massive liquidity injection in late December.

Abundant funds in the system stabilised markets and mitigated concerns about a crisis triggered by European banks' financing difficulties, but uncertainty about global economic prospects led investors to trim their risk exposure.

Oil also pared earlier gains, underscoring the market's vulnerability in the face of broad selling across asset classes.

The supply risk premium to Iran is supporting prices, but the main volatility is from the demand side, said Jeremy Friesen, a commodity strategist at Societe Generale.

It's interesting that weak economic data hasn't caused a sell-off in oil, but as more data emerges this week, it could disappoint investors enough to weaken prices, Friesen said.

The MSCI Asia Pacific ex-Japan index <.MIAPJ0000PUS> fell 1.4 percent, dragged lower by Chinese shares and the pan-Asian mining sector <.MIAPJMT00OUS>. Tokyo's Nikkei average <.N225> slipped 0.8 percent. <.T>

Resource-reliant Australian shares fell on worries over weak demand from China and its currency extended losses to a fresh one-week low around $1.0604 after the Reserve Bank of Australia kept interest rates steady, as expected. The New Zealand dollar hit a six-week low at $0.8133.

Financial spreadbetters expected major European markets <.FTSE> <.FCHI> <.GDAXI> to open around 0.2 percent lower. <.L> <.EU>

Copper, typically driven by the demand outlook, fell. London copper eased 0.7 percent to $8,445 a tonne and Shanghai copper fell 1 percent to 60,540 yuan ($9,600) a tonne.

Some analysts, however, said markets need not be too worried about China cutting its growth target to an eight-year low of 7.5 percent, from 8 percent, and shifting its priorities towards boosting domestic consumer demand.

There is no need to be so pessimistic about slowing demand from China, said Chiyuki Shiraiwa, economist at SMBC Nikko Securities.

Boosting domestic consumption will strengthen demand for a variety of goods from overseas, broadening opportunities beyond resource-rich countries to export to China.

Hong Kong shares <.HSI> and Shanghai equities <.SSEC> both slid more than 1.5 percent.

Sentiment in Asian credit markets was also cautious, with spreads on the iTraxx Asia ex-Japan investment-grade index widening by a couple of basis points.

UNCERTAINTY OVER IRAN, GREECE

Oil was the only market bucking the downtrend earlier in the day, but they also turned negative as other markets deepened their slide.

Israeli Prime Minister Benjamin Netanyahu assured President Barack Obama on Monday that Israel has not made any decision on attacking Iran's nuclear sites, sources close to the talks said, but the Israeli prime minister gave no sign of backing away from possible military action.

Brent crude fell 0.2 percent to $123.60 a barrel while U.S. crude dipped below $106.70 a barrel.

The euro eased 0.2 percent to $1.3193, inching closer to Monday's two-week low of $1.3160. a bearish technical outlook sent spot gold down 0.2 percent to $1,702 a tonne.

There is very little incentive to buy gold at the moment, keeping prices sideways, said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo. But there is also no sign that investors are moving funds out of gold to other assets, given no change in factors supporting gold, he said.

Among such factors is the uncertainty surrounding Greece, which needs to complete a bond exchange with private holders, scheduled to close on March 8, before a second bailout is paid.

It is still not clear how much participation Athens will see for its bond swap and a failure to agree on the swap would put the country back on the brink of a messy default, and could reignite fears about the collapse of the single currency.

Greece's major bondholders voiced their support on Monday for a deal that will halve the value of their debt holdings and aims to put the country back on a sustainable debt-repayment footing.

This uncertainty is likely to weigh on risk appetite and European assets (including the EUR), Barclays Capital analysts said. ($1 = 6.3067 Chinese yuan)

(Additional reporting by Ian Chua in Sydney and Jessica Jaganathan in Singapore; Editing by Alex Richardson)