Asian shares fell Thursday as investors fretted over the U.S. “fiscal cliff” and the European economy's further deterioration, which boosted the safe-haven yen and dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3 percent, Reuters reported, retreating from a near eight-month high on Wednesday. Australian shares dropped 1 percent after all major U.S. stock indexes slumped by more than 2 percent overnight. Japan's Nikkei opened down 1.2 percent.

"The general trend of weaker equities, higher bond prices and a weaker dollar will likely continue," Kazuto Uchida of the global markets division at the Bank of Tokyo-Mitsubishi UFJ, told Reuters. "A key gauge to risk appetite is how far U.S. equities will decline and whether U.S. 10-year yields will drop to 1.5 percent, as some had predicted."

A sharp retreat in risk appetite boosted safe-haven U.S. Treasury prices Wednesday, with the benchmark 10-year yield ending down 11 basis points at 1.6246 percent for its biggest single-day drop since May 30.

The dollar rose to a two-month high against a basket of major currencies of 80.924 on Wednesday, benefiting from the U.S. currency's safe-haven appeal. The dollar was down 0.1 percent against another safe-haven currency, the yen, at 79.92.

The euro stayed pressured at $1.2754, although it was off Wednesday's two-month low of $1.2736.

"The Greek vote is gone by, the flash Obama panic has forced ... investors to close down their positions to lock in profits," said Societe Generale analyst Sebastien Galy in a note to clients. "We are left with the usual story of flatter U.S. Treasuries helped by renewed reserve activity."

Japan Nikkei 225