Asian shares and the euro fell on Thursday on concerns over a slowdown in the global economy, including higher oil prices and data showing the euro zone may be sliding toward recession, fanning fresh worries about Greece.
MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> edged down 0.2 percent, having consolidated from recent rallies after the much-awaited deal for a 130 billion euro Greek bailout was sealed earlier in the week.
Japan's Nikkei average <.N225> opened nearly flat.
The euro stood at $1.3252, struggling to push beyond a near two-week high of $1.3293 reached Tuesday after the Greek deal. The dollar hung near a seven-month high against the yen of around 80.40 yen hit Wednesday.
While the Greek deal appears to have given the market some breathing space, mixed movements in a range of asset classes in the immediate aftermath suggested sentiment could be hit by factors such as slower growth prospects or political risk, Barclays Capital analysts said.
Despite this year's impressive rally in equity markets, sector performance shows signs that higher energy prices could slow the market advance and may portend some loss of economic momentum, they said.
A Reuters poll showed Thursday that Japanese manufacturing sentiment in February slid to its lowest since the aftermath of the March 2011 earthquake, indicating the world's No.3 economy may struggle to recover quickly from a slump on weak global demand and a strong yen.
European and U.S. shares fell Wednesday on weak euro zone service sector activity.
Markit's Eurozone Services Purchasing Managers' Index shrank unexpectedly, reviving fears of the economy sinking into recession and raising doubts over the Greece's ability to revive its economy and push fiscal reforms needed under the just agreed bailout program.
Fitch became the first ratings agency to make a widely expected downgrade of Greece after a bond swap agreement, putting Greek bank shares under heavy selling on worries over their recapitalisation.
The escalating Iranian nuclear row, which has helped push up
oil prices 11 percent this year, also returned to the radar for global investors.
Oil prices hit nine-month highs as the U.N. nuclear watchdog ended its latest mission to Iran after talks on Tehran's suspected secret atomic weapons research failed, a setback likely to increase the risk of confrontation with the West.
U.S. crude futures were down 33 cents to $105.95 a barrel Thursday, after settling at their highest level for front-month crude since May 4, 2011. ICE Brent crude for April delivery rose to settle at $122.90 a barrel on Wednesday, the highest for front-month Brent since May 2, 2011.
While the lift in the oil price is in line with a lift in demand, the magnitude of the lift is greater than we would expect suggesting prices are a headwind, ANZ Bank analysts said in a report.
They planned to reduce positions anchored by the industrial cycle, such as commodities, and tilt to assets that benefit from central bank policy support, such as bonds and corporate credit.
In Asian credit markets, a pause in risk taking pushed spreads on the iTraxx Asia ex-Japan investment-grade index wider by 3 basis points early Thursday.
(Editing by Richard Pullin)