Asian shares and growth-linked currencies were under pressure 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 move to lower its growth target and data pointing to Europe possibly slipping back into recession eroded the optimism that had been setting the tone since late in December, after the European Central Bank's first massive liquidity injection.

Ample liquidity has 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, hitting assets linked to growth.

The MSCI Asia Pacific ex-Japan index <.MIAPJ0000PUS> and Tokyo's Nikkei average <.N225> were both nearly flat. <.T>

Resource-reliant Australian shares fell on worries over weak demand from China and its currency shed nearly a full cent to one-week lows of $1.0656, but still up 4.3 percent this year. The New Zealand dollar plumbed a five-week low at $0.8203, but was still up around 5.6 percent so far this year.

I'm seeing this as a significant correction after a strong rally at the beginning of the year, said Greg Gibbs, strategist at RBS in Sydney.

Gold was sluggish as the market looked technically bearish. Spot gold was at $1,705 an ounce, little changed from late Monday. The euro held steady near $1.3219, after hitting a two-week low of $1.3160 on Monday.


Greece needs to complete a bond exchange with private holders, scheduled to close on March 8, before a second bailout is paid, but there is still uncertainty over how much participation Athens will see for its bond swap.

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), as well as boost safe haven assets (such as the USD and JPY) in the near term, Barclays Capital analysts said.

Another uncertainty hanging over investors' mind is the tension over Iran's standoff with the West, which have kept upward pressure on oil prices.

U.S. President Barack Obama appealed to Benjamin Netanyahu on Monday to give sanctions time to curb Iran's nuclear ambitions, but the Israeli prime minister offered no sign of backing away from possible military action, saying his country must be the master of its fate.

Brent crude settled up 15 cents at $123.80 a barrel on Monday. U.S. crude edged up 0.5 percent to $107.25 a barrel on Tuesday.

Following China's scaled back growth forecast, Markit's Eurozone Composite PMI, which gauges the activity of manufacturing and services companies, showed on Monday it slipped to 49.3 in February from January's of 50.4, raising concerns the region would fall into a recession.

The survey showed that a sharp downturn among businesses in countries struggling with high debts -- Italy and Spain -- dragged the euro zone's private sector back into decline last month, while Germany expanded at a slower pace and activity in France stalled.

Investors shrugged off data showing the massive U.S. services sector expanded in February at its fastest pace in a year.

(Additional reporting by Ian Chua in Sydney; Editing by Alex Richardson)