(REUTERS)-Asian stocks sank on Tuesday and the euro languished near a two-month low as investors took fright at the prospect of mass euro zone sovereign ratings downgrades after the outcome of a last chance European Union summit failed to convince markets.

Commodities were also abandoned and the risk currencies of big resource producers such as Australia nursed heavy losses as investors huddled in the relative safety of the dollar, lifting both the U.S. currency and Treasuries.

Although there were hopes that Europe would stabilize after the summit last week, we are seeing fresh uncertainty as Moody's, Standard & Poor's and Fitch have all warned on Europe, said Hiroichi Nishi, equity general manager at SMBC Nikko Securities in Tokyo.

Japan's Nikkei share average <.N225> opened down 1.4 percent, while MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> fell 0.9 percent. <.T>

Shares in growth sensitive commodity producers were hit hard, with global miners BHP Billiton and Rio Tinto both shedding more than 2 percent. <.AX>

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Euro zone crisis graphics http://r.reuters.com/hyb65p

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Friday's summit deal to strengthen budget discipline in the embattled euro zone had initially cheered investors, prompting a short-lived rally in riskier assets.

But by Monday the focus had shifted to legal uncertainty surrounding the new pact -- which will be negotiated outside the 27-nation EU after Britain refused to join -- and the absence of an unlimited financial backstop for the single currency.

DOWNGRADES AHEAD?

The mood darkened after ratings agency Moody's said it would review ratings of all EU member states in the first quarter of 2012, while rival Fitch said the summit had failed to provide a comprehensive solution to the debt crisis.

As equity markets dived on both sides of the Atlantic on Monday yields on Italian and Spanish debt spiked, with Italy's 10-year government bond yields crossing the 7 percent threshold widely seen as unsustainable in the longer term.

The euro fell to a 2-1/2-month low at $1.3164 on Tuesday, before steadying around $1.3170, while the Australian dollar shed more than a cent to stand around $1.0040. The dollar <.DXY> jumped more than 1 percent against a basket of major currencies to its highest this month.

Enthusiasm for the dollar pushed the yield on 10-year U.S. Treasuries down to around 2.02 percent.

(Additional reporting by Hideyuki Sano in Tokyo and Ian Chua in Sydney; Editing by Sanjeev Miglani)