By Lisa Twaronite
TOKYO (Reuters) - Tumbling crude oil futures dragged down Asian shares on Monday after producers' weekend talks failed to agree a plan to curb the global supply glut, and Tokyo shares dropped as investors assessed the impact of a devastating earthquake in southwestern Japan.
Some 18 oil exporting nations had gathered in Doha, the capital of Qatar, in an attempt to agree stabilising output at January levels until October 2016. The pact fell apart after Saudi Arabia demanded that Iran join in.
Brent crude futures tumbled about 4.6 percent to $41.10 while U.S. crude slid about 5.2 percent to $38.26.
"Given the strong correlation between the oil price and equities, Asian markets are not looking like they will have a good start to the week," said wrote Angus Nicholson, market analyst at IG in Melbourne.
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"Commodities are likely to drive the pullback in equities today, with materials and energy stocks in for a difficult session," Nicholson said. "We will quite likely see credit spreads widen again today, as the oil price has been a major driver for high yield credit."
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.5 percent lower.
S&P 500 e-mini futures dropped 0.6 percent. Wall Street ended with modest losses on Friday but major indexes still posted weekly gains.
The Nikkei stock index fell 2.7 percent, as investors and companies assessed the impact of devastating earthquakes in southwestern Japan's Kyushu on manufacturers' supply chains.
A 7.3 magnitude tremor struck early on Saturday, following a smaller quake on Thursday, centred on the region's Kumamoto prefecture, an important manufacturing hub.
The plunge in crude oil prices took a large slice out of commodity currencies.
The greenback gained 1.1 percent against the Canadian dollar to C$1.2961 while the Australian dollar shed 0.8 percent to $0.7663.
The Japanese yen, a perceived safe-haven, rose on the turmoil, with the dollar skidding 0.6 percent to 108.07 yen.
Also bolstering the yen, Japan's lobbying efforts at last week's Group of 20 finance ministers' meeting in Washington failed to result in informal consent to act against an unwelcome currency rise. U.S. officials appeared unconvinced by Japan's argument that the yen's recent gains have been too sharp.
The euro was down 0.6 percent at 122.05 yen after earlier dropping to 121.95, its lowest since April 2013.
The euro edged up about 0.1 percent to $1.1296, while the dollar index edged down slightly to 94.681.
U.S. economic data out on Friday suggested economic growth stalled in the first quarter. Industrial production dropped a more-than-expected 0.6 percent last month, its sixth dip in the last seven months, while consumer sentiment fell to its lowest since September.
Gold, another perceived safe-haven asset, also gained. Spot gold rose 0.2 percent to $1,233.70 an ounce.
In Brazil, supporters of the impeachment of President Dilma Rousseff took the lead in a ballot in the lower house of Congress on Sunday. That could hasten the end of 13 years of leftist Workers Party rule in Latin America's biggest economy.
(Reporting by Lisa twaronite; Editing by Shri Navaratnam and Eric Meijer)