(Updates levels throughout, adds graphic chart)
* MSCI ex-Japan eases 0.5 pct after three days of gains
* Euro near 6-1/2 month lows on political turmoil in Italy
* Markets fear a snap Italian election will turn into referendum on EU
* Oil remains in downward spiral, gold flat
By Swati Pandey
SYDNEY, May 29 (Reuters) - Asian shares fell on Tuesday and the euro hovered near 6-1/2 month lows as early elections loomed in Italy, but a revival in diplomatic talks with North Korea and a retreat in oil prices from recent highs supported sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.5 percent after three consecutive sessions of gains.
Japan's Nikkei skidded more than 1 percent while South Korean shares slipped 0.8 percent. Chinese shares were in the red, too, with the blue-chip down 0.6 percent.
Australia was the only market in the black, thanks to gains in banking stocks. But liquidity was relatively thin with public holidays in Singapore, Malaysia, Indonesia and Thailand.
"The market has turned its focus to the continuing political situation in Italy," said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.
European shares were hammered overnight after the anti-establishment 5-Star and League parties in Italy abandoned plans to form a government.
Investors feared Italy's election campaign could focus on the country's continued membership of European institutions and strengthen the populist parties' hand.
Adding to the uncertainty, Spanish Prime Minister Mariano Rajoy will face a vote of confidence in his leadership on Friday.
"This should keep the risk trades pressured to the downside," Twidale added. "(The) focus will remain on the on-again, off-again U.S.-North Korean summit and the U.S.-China trade relationship as we move through the Asian trading session."
E-Mini futures for the S&P500 gave up early gains but were still marginally firmer. Trade was subdued overnight with market holidays in the world's two biggest financial centres - London and New York.
The tick up in U.S. stock futures came as South Korean President Moon Jae-in flagged more impromptu talks and summits with North Korea's Kim Jong Un after the pair's surprise meeting at the weekend.
Kim has reaffirmed his commitment to "complete" denuclearisation of the Korean peninsula, Moon said, as U.S. officials seek to revive what would be a historic meeting between President Donald Trump and Kim.
The euro was last at $1.1629 from Monday's $1.1608, its lowest since early November.
The dollar rose 0.2 percent against a basket of major currencies to stay near the highest since mid-November.
But against the safe harbour yen, it dipped to 109 to edge closer to a recent three-week trough of 108.94.
Analysts will next focus their attention on U.S. inflation data due later in the week which could provide clues to future interest rate rises ahead of the Federal Reserve policy meeting next month.
In a sign that investors were flocking to safer bets, U.S. 10-year Treasuries opened at six-week lows of 2.9 percent after the holiday on Monday.
Another potential overhang for Asian emerging markets was an ongoing truckers' strike in Brazil to protest rising fuel prices which will "potentially feed through into higher food prices," analysts at JPMorgan said in a note.
Brazilian equities plunged more than 4 percent on Monday to their lowest level this year.
Oil prices remained under pressure from expectations that Saudi Arabia and Russia would pump more crude, even as U.S. oil output rises.
U.S. crude futures tumbled to six-week lows and looked set for a fifth straight day of declines. The July contract was last down 1.6 percent at $66.81 a barrel.
Brent crude futures edged up 0.3 percent after dropping to $74.49 per barrel on Monday, their lowest in about three weeks. They were last at $75.53.
Spot gold was barely changed at $1,297.00 an ounce.
Reporting by Swati Pandey Editing by Eric Meijer and Kim Coghill