* Euro falls after German state election
* Asian shares slip on Japan nuclear concerns
* Middle East tension supports oil, gold
By Richard Leong
HONG KONG, March 28 (Reuters) - The euro slipped on Monday
after German Chancellor Angela Merkel's conservatives were
routed in elections in a key state, while Asian shares slipped
as turmoil in the Middle East and Japan's nuclear crisis left
investors with little appetite for riskier assets.
"Clearly risks are rising, but not sufficient to tip the
euro over the edge yet. There's also a range of support on the
way down, it's not going to collapse even if it falls through
$1.40," said Greg Gibbs, a strategist at RBS in Sydney.
The euro last traded at $1.4046 , compared with
$1.4065 late in New York on Friday. Early in the session, it was
marked down to around $1.4020.
Merkel's Christian Democrats lost power on Sunday in the
rich state of Baden-Wuerttemberg, where anti-clear sentiment has
been mobilised by radiation leaks from an earthquake-stricken
nuclear plant in Japan.
The loss of the regional stronghold could limit Merkel's
ability to pass legislation as her coalition centre-right
government deals with nuclear power, military action in Libya
and the euro zone debt crisis. See []
While erosion of Merkel's clout at home weighed on the euro,
prospects of a European Central Bank rate was an important
element holding up the single currency, Gibbs said.
Along with its gains versus the euro, the dollar firmed
against the yen , helped by Friday's comments from a U.S.
central bank official who said the Federal Reserve is poised in
the "not-too-distant future" to begin rolling back its super
loose monetary policy to avert inflation.
Easier U.S. policy has helped boost global financial markets
by flooding them with cheap money in search of higher returns,
though it has also added to inflationary pressures in emerging
economies.
The U.S. dollar last traded at 81.58 yen, up from 81.43 late
Friday in New York.
Japan's Nikkei fell 0.4 percent as workers continued
to battle to stem radiation leaks at the crippled Fukishima
nuclear plant, and more dead were pulled from the rubble in the
country's northeast, which was devastated by a massive quake and
tsunami on March 11. []
Shares elsewhere in Asia were mainly weaker, with MSCI's
index of Asian shares outside Japan easing 0.1
percent.
MIDEAST UNREST SUPPORTS OIL, GOLD
Further Western air strikes in Libya and tension in Syria,
Yemen and Bahrain continued to fuel investor uneasiness over
supply from the oil-rich Middle East region and to support safe
haven demand for gold.
U.S. crude <CLc1> was little changed at $105.38 a barrel and
Brent crude <LCOc1> edged up 2 cents to $115.61.
Spot gold was last at $1,426.19 an ounce, down
slightly from Friday and below a record high of $1,447.40
reached on March 24. It still up 2 percent since March 15.
(Reporting by Ian Chua in SYDNEY, Ayai Tomisawa in TOKYO, Cho
Mee-young in SEOUL and Rujun Shen in SINGAPORE; Editing by Kim
Coghill)
