Asian shares fell on Tuesday as sluggish U.S. and global manufacturing data added to concerns about the health of the world economy, while a strengthening yen prompted speculation that Tokyo may intervene in the markets to curb the currency.

An 11th-hour deal to raise the U.S. debt ceiling cleared its biggest hurdle in the House of Representatives, staving off the prospect of a possibly calamitous default but failing to allay fears Washington could still lose its coveted triple-A credit rating.

U.S. manufacturing grew at its slowest pace in two years in July as new orders contracted, and the economic concerns coupled with uncertainty over the U.S. debt deal boosted demand for safe-haven currencies such as the Swiss franc and weighed on riskier assets such as oil and stocks.

European stock markets were expected to extend a week-long slide, with financial bookmakers calling London's FTSE <.FTSE> to open flat and France's CAC-40 <.FCHI> and Germany's DAX <.GDAXI> down 0.2 percent. <.EU> <.L>

S&P 500 index futures fell 0.4 percent, pointing to a weaker start on Wall Street. <.N>

Japan's Nikkei <.N225> fell 1.3 percent, while MSCI's broadest measure of Asian shares outside Japan <.MIAPJ0000PUS> slipped 1.6 percent.

While in the short term they've avoided global financial crisis mark two, they're likely to need more budget cuts, Joseph Capurso, strategist at Commonwealth Bank in Sydney, said about the U.S. debt deal.

When you put that together with very soft U.S. economic data, that raises the odds that the Fed will need to introduce more quantitative easing. I can see the U.S. dollar becoming weaker.

U.S. stocks eased on Monday, with the S&P 500 <.SPX> closing down 0.4 percent as the weak manufacturing report offset relief that a debt default had been averted. <.N>

Compounding pessimism about the anemic state of the economy were concerns about the fiscal drag on growth as a result of spending cuts in the U.S. debt deal, which calls for a special Congressional panel to find $1.5 trillion in budget savings by late November.

While the political cloud of uncertainty may lift somewhat, the economic storm clouds are darkening, Yelena Shulyatyeva, an economist at BNP Paribas wrote in a client note.

Today's fall is not a big surprise as the market has been concerned about the U.S. economy's long-term outlook, although the country was able to avoid a default, said Naoki Fujiwara, a fund manager at Shinkin Asset Management in Tokyo.

The world's manufacturing sector expanded at its weakest pace in two years last month, surveys showed, as factories reported shrinking orders for the first time since major economies emerged from the banking crisis and recession of 2008.

The dollar traded around 0.7805 Swiss francs on Tuesday, having plumbed a record low around 0.7730 on Monday.

Against the yen, the dollar stood near 77.40, recovering from a low of 76.29 on electronic trading platform EBS on Monday, its weakest since the coordinated intervention by major central banks in mid-March to slow the surging yen.

POSSIBLE INTERVENTION

Japanese officials said the yen, which has gained nearly 5 percent this month, was too strong and could hurt an economy struggling to recover from a massive earthquake in March -- putting markets on alert for possible intervention.

Coupled with the Bank of Japan's monetary measures, Japan will be able to intervene to push up the dollar against the yen, said Masanari Takada, forex strategist at Nomura Securities.

Still, it may be difficult to keep the dollar bolstered for long as it is under downward pressure because of caution toward the outlook for the U.S. economy and falling in U.S. Treasury yields.

Others were less convinced that Tokyo would act, however, given that past interventions have only really succeeded when the action has been co-ordinated with other central banks.

I don't think Japan will intervene, Richard Yetsenga, global head of FX strategy at ANZ Research, told Reuters Insider TV.

I think what's driving the yen are really global forces rather than domestic forces. It's really about the weakness of the U.S. dollar rather than the strength of the yen.

Gold edged up, supported by news that South Korea's central bank had bought 25 tonnes in recent months to diversify its foreign exchange reserves. Spot gold traded around $1,623.26 an ounce.

This news reiterates the fundamental view that most investors, asset managers, and even central banks hold true -- that gold remains the quintessential currency hedge, a stabilizing asset for portfolios, and a safe haven in uncertain economic times, said David Meger, director of metals trading at Vision Financial Markets, a futures broker based in Chicago.

Oil slipped, with U.S. crude shedding around a quarter of a percent to $94.66 a barrel, after trading as low as $93.42 on Monday, its weakest since late June.

The economic uncertainty boosted demand for government debt, with 10-year Japanese government bond futures rising 0.25 point to 142.02, while the benchmark 10-year yield slipped 3.5 basis points to 1.04 percent, its lowest in nearly 9 months.

(Additional reporting by Ian Chua in Sydney, Ayai Tomisawa in Tokyo and Reuters Insider TV in Hong Kong; Editing by Ramya Venugopal)

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