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The MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4%, dragged down by a 1.1% slide in Australian shares and a 0.6% drop in South Korean shares.
Italy's centre-left coalition will win a majority in the lower house of parliament but the upper house will be deadlocked, the Interior Ministry said on Tuesday after almost all votes were counted. No party or coalition won a majority of seats in the Senate, which a government would need to pass legislation.
A split parliament in the euro zone's third-largest economy is seen as likely to paralyse any new government and potentially reignite the euro-zone debt crisis.
"Uncertainty over the Italian election outcome and its impact will certainty keep the euro under strong pressure for some time," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
"A safety net has been provided over the past year in the euro zone and given the size of Italy's economy, I doubt that the situation will turn into a disaster, but we need to carefully monitor developments. It revives memories of risks in the euro zone," Saito added.
The focus will now be on an Italian treasury bill auction on Tuesday when borrowing costs could rise, given the Senate election result.
The euro was up 0.2% at $1.3085, off a more than six-week low against the dollar of $1.3047 touched on Monday on jitters about political gridlock in Italy hampering the country's efforts to reform and slash its debts.
The yen resumed its retreat after firming sharply on Monday. The yen traded down 0.8% against the dollar at 92.56 on Tuesday and down 0.7% at 121.11 against the euro.
The yen soared as much as over 3% against the euro and 2% against the dollar on Monday as the yen's recent steep losses on bets of aggressive reflationary monetary policy in Japan have made it vulnerable to sharp reversals.
On Monday, the yen rose to a three-week high of 90.85 yen from its intraday low of 94.77 touched earlier in the day, its lowest since May 2010. The yen also surged to 118.74 against the euro from its day's low of 125.36.
The yen's overnight appreciation hit Japan's Nikkei stock average hard, with the index slumping 1.9% after closing at a 53-month high the day before.
Traders said the plunge in the dollar and the euro against the Japanese currency has provided fresh opportunities to buy these currencies against the yen, with many market players still seeing a weak yen trend continuing.
Investors also await testimony later in the day from Federal Reserve Chairman Ben Bernanke for further clues of when the Fed intends to slow down or stop its bond-buying programme.
Financial markets were rattled last week by minutes of the Fed's January meeting showing some Fed officials were mulling scaling back its strong monetary stimulus earlier than expected.
"Bernanke's testimony will likely drive global market sentiment tonight, as markets wait for clues on the Fed's exit strategy for its bond-buying stimulus program. Our house view is that Bernanke will remain dovish," ANZ said in a note.
Ahead of Bernanke's appearance, Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said on Monday that US economic growth could surpass expectations this year, but an anaemic labour market requires ongoing support from monetary policy.
The United States also faces downside risks to its economy if $85 billion in government-wide "sequestration" spending cuts go ahead on March 1.
US benchmark Standard & Poor's 500 Index suffered its worst one-day percentage decline since November 7 on Monday as investors sought safety, pushing benchmark US Treasury yields down to a one-month low and lifting gold about 1% higher.
US crude slid 1% to $92.23 a barrel and spot gold was up 0.1% to $1,595.40 an ounce.
