SINGAPORE (Reuters) - Escalating tensions in the Middle East, the impending testimony of the former FBI director, British elections and a European Central Bank meeting this week, all took their toll on Asian stocks, oil and the dollar on Tuesday.
Oil fell back following a brief recovery after Saudi Arabia and several other Arab states severed ties with Qatar, accusing it of supporting extremism and undermining regional stability.
"A potential risk to monitor might be that Qatar will view this as being provided with less encouragement to comply with the agreed production quota," said Jameel Ahmad of futures brokerage FXTM.
Stocks in Qatar plunged more than 8 percent overnight to their lowest since January 2016.
U.S. crude was 0.6 percent lower at $47.12 a barrel on Tuesday, after falling 0.55 percent on Monday.
Global benchmark Brent retreated 0.6 percent to $49.17, extending Monday's 1 percent slide.
The dollar index touched a seven-month low ahead of testimony before Congress from former FBI director James Comey on Thursday.
It has been reported that Comey plans to testify to conversations in which U.S. President Donald Trump pressured him to drop his investigation into former National Security Advisor Mike Flynn, who was fired for failing to disclose conversations with Russian officials.
"The dollar is already on the defensive after Friday's jobs data, and now it's facing potential geopolitical risk in the form of Comey's testimony," said Bart Wakabayashi, Tokyo Branch Manager of State Street Bank.
The dollar index, which tracks the greenback against a basket of trade-weighted peers, fell to its lowest level since the November U.S. election and was last down 0.2 percent at 96.623.
The dollar slid 0.6 percent to 109.85 yen on Tuesday, close to the six-week low hit earlier in the session.
News on Monday of U.S. services sector activity slowing in May as new orders tumbled also hit the dollar.
The dollar also came under pressure from a stronger euro, on expectations the European Central Bank will take a less dovish tone at its Thursday meeting.
The ECB may even discuss dropping some of its pledges to ramp up stimulus if needed, four sources with direct knowledge of the discussions told Reuters last week.
The common currency was 0.1 percent higher at $1.127 on Tuesday.
Sterling advanced 0.1 percent to $1.292 on Tuesday.
The lead of British Prime Minister Theresa May over the opposition Labour Party ahead of Thursday's general election has narrowed to just 1 percentage point, according to a poll conducted before the attacks in London on Saturday.
Other polls in recent days have found bigger leads for the Conservatives of up to 11 and 12 points.
"Even if May does just about enough to increase the majority - that could still potentially be sterling positive," said ING currency strategist Viraj Patel.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.2 percent, pulling back from a two-year high hit on Monday.
Japan's Nikkei dropped 0.5 percent, tripped by a stronger yen.
South Korean markets were closed for a holiday.
Australian shares tumbled 1.1 percent, while the Australian dollar slipped 0.2 percent to $0.7471 after the current account deficit narrowed to its smallest in more than 15 years last quarter - but still disappointed investors who had hoped for a surplus.
Investors are awaiting the Reserve Bank of Australia policy decision later on Tuesday, when its benchmark rate is expected to be held at a record low 1.5 percent.
Chinese shares and Hong Kong shares bucked the trend, rising 0.1 percent and 0.3 percent respectively.
Overnight, Wall Street indexes slipped between 0.1 percent and 0.2 percent, with Apple Inc. leading losses on the Dow Jones Industrial Average.
(Reporting by Nichola Saminather; Additional reporting by Shinichi Saoshiro, Henning Gloystein and Ritvik Carvalho; Editing by Shri Navaratnam and Eric Meijer)