The euro slipped back toward a two-month low and oil prices fell on Wednesday as a rally the previous day fizzled on fears about Europe's spreading debt crisis and the potential for a further reduction of positions in risky assets.

Asian stocks also fell, tracking weakness on Wall Street as firmer commodity prices were offset by lingering concerns over the economic outlook for the United States as well as euro zone debt woes.

The euro, which had rallied after better-than-expected German business confidence data on Tuesday, edged back in the direction of a two-month low of $1.3968 hit earlier this week. It has lost roughly 6 percent since early May.

Europe's policy options to avert a Greek debt default appear to be dwindling fast, casting a pall over the single currency and fueling fears of a chain reaction in other heavily indebted countries in the 17-nation euro area.

Concern about Spain and Italy might be overblown, but the Greece issue is not going away, and if Greece restructures, that may open the door for Ireland and Portugal. said Brian Dolan, chief strategist at

The U.S. dollar <.DXY> rose 0.3 percent against a basket of major currencies.

A Greek debt default would hurt other peripheral euro zone states and could push Portuguese and Irish debt into junk territory, Moody's said on Tuesday, warning it would classify most forms of restructuring as a default.

As investors reduced exposure to riskier assets, MSCI's index of Asia-Pacific stocks outside Japan fell 0.7 percent while Japan's benchmark Nikkei slipped 0.46 percent.

Oil slid as the dollar rebounded against the euro, giving up some of its 2 percent rise overnight after Goldman Sachs raised its price forecasts for Brent crude. Brent crude for July delivery fell 0.64 percent to $111.81 a barrel, having swung between $109.50 and $112.65.

Euro-denominated gold hit a record high after the euro edged back toward a two-month low on euro zone debt fears.

Spot gold fell to $1,524.20 an ounce after rising as high as $1,527.45 on Tuesday, its strongest since May 4. Bullion was still below a lifetime high around $1,575 an ounce struck in early May.