Risk assets from stocks, through oil to the Australian dollar fell on Tuesday as investors waited for a gathering of central bankers and economists at Jackson Hole, Wyoming, later in the week, that could shed some light on a possible U.S. Federal Reserve stimulus plan.

"Investors appear to be deferring decisions in the short term until after Fed Chairman Ben Bernanke's speech in Jackson Hole this weekend," said Cho Byung-hyun, an analyst at Tong Yang Securities.

The past month's broad-based rally has been driven by hopes for more easing from the Fed to support growth through a third round of bond buying or other measures, and expectations the European Central Bank will act to firmly cap borrowing costs.

But investors, becoming wary of the past month's rally which has extended in absence of any concrete action, turned to growth worries to dictate trade this session.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched down 0.3 percent to a three-week low, dragged down by its materials sector.

Australian shares .AXJO pared early gains to trade flat as iron ore miners were hit by uncertainty over global growth, while Japan's Nikkei stock average .N225 turned negative and traded down 0.3 percent, weighed by a drop in its China-linked index .NCHN.

"People think the market is going to be tied up here ... on concerns over slowing growth in China. We have seen quite a lot of shorting on some China-linked names, some of the machinery, chemical that kind of stuff," a senior dealer at a foreign bank said.

Shanghai shares .SSEC steadied after slumping to their lowest level since March 2009 on Monday on fading hopes for more "formal" monetary easing to underpin China's fragile growth, as the Chinese premier failed to refer to the possibility in recent comments.

"We believe the cautious (Chinese) response reflects mixed economic assessments from government officials, the acceleration of inflation in July, and lack of clear policy direction during a period of political transition," said Barclays Capital analysts in a research.

The Australian dollar, a typical gauge for investor risk appetite and highly sensitive to the outlook of the Chinese economy, hit a five-week low against the U.S. dollar of $1.0345.

Some see value stocks even in the current environment, as companies have strengthened their balance sheets by cutting costs and building cash buffers.

"The U.S. economy has picked up a little but that's coming from a low level, while in Europe, all the macro numbers seem to suggest the economy is not faring very well. There is some noise of stimulus in China but generally the exporters there haven't done too well. It's not exactly a healthy picture for the global economy," said Kwok Chern-Yeh, head of investment management, Japan, at Aberdeen Investment Management in Tokyo.

"If you look at the company level though, while things are slowing, there are pockets of resilience in this market where companies have done relatively well," he said.

EUROPE EYED NEXT MONTH

The dollar fell 0.3 percent against the yen to 78.52 and the euro also eased 0.2 percent to $1.2473, its lowest in a week, pressured by a weak German business sentiment index which fell for a fourth month in a row to its lowest level since March 2010.

Fed Chairman Ben Bernanke will speak at the annual Jackson Hole meeting on Friday ahead of the Fed's Sept. 12-13 policy meeting. He has used the event in the previous two years to signal the Fed's policy intentions. ECB President Mario Draghi is due to speak at the event on Saturday.

Next month will be pivotal for Europe, with the ECB's policy meeting on September 6 followed by the German Constitutional Court's ruling on the euro zone's permanent bailout fund on Sept. 12.

ECB board member Joerg Asmussen said on Monday that the ECB will tailor its new bond-buying plan to dispel any concerns that it funds governments, and while he stopped short of when the bank would begin buying, he made clear the plan would go ahead despite Bundesbank opposition.

Greece will also face scrutiny next month from its global lenders who will assess Athens' progress in debt cutting efforts before deciding on an aid to keep the country afloat.

Oil fell, with U.S. crude off 0.2 percent to $95.27 a barrel and Brent down 0.4 percent at $111.84.

Spot gold slipped 0.3 percent to $1,658.61 an ounce, after touching a 4-1/2 month high of $1,676.45 on Monday.

Copper dropped 0.8 percent to $7.583 a tonne.

Despite weak equities, Asian credit markets were resilient, with the spread on the iTraxx Asia ex-Japan investment-grade index widening a scant 1 basis point.

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