* Stocks extend selloff on Italian crisis; Asia follows Wall St slide
* Edgy investors flee stocks, seek safety in bonds
* Euro hits 10-month low, dollar and yen rise
* U.S. moves on China trade also unnerve investors
* Oil under pressure after big falls in last 3 days
By Tomo Uetake
TOKYO, May 30 (Reuters) - Asian stocks extended a global sell-off on Wednesday as Italy's political crisis rippled across financial markets, toppling the euro to a 10-month low, pushing up Italian borrowing costs and sending investors rushing to safe-haven assets such as U.S. Treasuries.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS tumbled 1.5 percent, while Japan's Nikkei average .N225 sold off as much 1.9 percent to hit a six-week low. Chinese shares also headed south, with the Shanghai Composite index .SSEC down 1.8 percent, South Korea's KOSPI .KS11 and Australia's S&P/ASX 200 .AXJO slipped 2.0 percent and 0.6 percent, respectively.
The sharp downturn followed from an equally harsh session on Wall Street on Tuesday, where the Dow Jones Industrial Average .DJI fell 1.6 percent, the S&P 500 .SPX lost 1.2 percent and the Nasdaq Composite .IXIC dropped 0.5 percent. The financial sector took a hard hit.
Investors fear that repeat elections in the euro zone's third-largest economy - which could come as soon as July - may become a de-facto referendum on Italian membership of the currency bloc and the country's role in the European Union. way Italy's short-term debt yields are spiking makes you think default risk is on radar in the market. It tells how grave the situation is," said Makoto Noji, senior strategist at SMBC Nikko Securities.
"What the markets are starting to factor-in is not a default per se but an early election leading to a victory of eurosceptics and an exit from the euro."
Short-dated Italian bond yields IT2YT=RR - a sensitive gauge of political risk - soared 1.5 percentage points from Monday to their highest since 2013 in their biggest move in nearly 26 years. Markets LLC reported average trading volume in the debt is up by more than 60 percent in May compared to the month prior.
Safe-haven U.S. Treasury bonds and German bunds rallied, as did the Japanese yen, the U.S. dollar and gold. The euro fell against the Swiss franc, Japanese yen and U.S. dollar, nearing $1.15 EUR= and touching its lowest point since July.
In Asia, the focus was also on the on-again, off-again U.S.-North Korean summit and the U.S.-China trade relationship.
A top North Korean official was headed to New York on Tuesday for talks with U.S. Secretary of State Mike Pompeo, the latest indication that the summit between President Donald Trump and North Korean leader Kim Jong Un may go ahead next month.
Trump confirmed in a tweet that Kim Yong Chol, a former spy chief and trusted adviser to North Korea's leader, was on his way for what would be the highest-level meeting in this week's flurry of diplomatic activity aimed at salvaging the historic summit. trade tensions also added to the sombre mood in markets.
The United States said on Tuesday that it would continue pursuing actions on trade with China, prompting Chinese state media to slam the U.S. announcement. market stocks .MSCIEF lost 1.2 percent, marking a new low point for the year, under continued pressure from a rising U.S. dollar for countries that often borrow in that currency.
"It's not surprising that investors fled fragile emerging markets and southern Europe and sought safety in cash," said Yasuo Sakuma, chief investment officer at Libra Investments.
Oil struggled under pressure from expectations that Saudi Arabia and Russia would pump more oil to counter potential supply shortfalls from Venezuela and Iran, even as U.S. output has surged in recent years.
U.S. crude futures retreated 0.4 percent to $66.46 per barrel CLc1 , extended falls after declining for five consecutive sessions.
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