* MSCI Asia Pacific ex-Japan index falls 2.1 pct
* European shares seen opening 0.9 pct to 1.2 pct lower
* Euro falls to four-month low vs dollar, record vs Swiss franc (Updates prices, adds comments)
By Anshuman Daga
SINGAPORE, July 12 (Reuters) - The euro declined to a four-month low on Tuesday after new IMF Managing Director Christine Lagarde said the fund was not yet ready to discuss terms of a second Greek bailout, while equity markets tumbled on concerns more countries will be engulfed by the euro zone's debt problems.
European stock index futures pointed to a sharp decline in
equities, extending the previous session's steep sell-off. By
0605 GMT, futures for Euro STOXX 50
Growing worries about Europe stoked investors' flight from riskier assets into bonds, extending a rally in U.S. Treasuries and sending Japanese government bond prices to a two-week high.
In a bid to keep Italy and Spain from the same fate as Greece, Portugal and Ireland, euro zone finance ministers promised on Monday cheaper loans, longer maturities and a more flexible rescue fund. They said new measures would be announced "shortly", but set no deadline.
"Even if they agree on a multi-billion dollar package for Greece and other affected peripheral countries, if we don't see a continuation of implementation of the austerity cuts, all bets are off," said Thomas Lam, group chief economist at OSK-DMG in Singapore.
The euro fell as low as $1.3932 -- its lowest since March 17 -- after a slew of stop-loss orders were triggered below $1.3980. The single currency fell broadly, dropping to an all-time low of 1.1660 Swiss franc .
The euro extended its early losses against the dollar in Asia and was down 0.6 percent by 0605 GMT after Lagarde said the IMF and its European partners were not yet ready to discuss conditions or terms of a second bailout package for Greece. She said the contagion currently hitting Italy was tied to market-driven forces.
"The market was to a certain extent expecting the problems in Greece to spread to Spain, but this drastic move in Italian bonds was very surprising," said Osamu Takashima, chief forex strategist at Citibank in Tokyo.
The spread on the 10-year Italian bond yield over that of German bonds widened to above 300 basis points the previous day from about 180 bps at the start of the month.
Billionaire investor George Soros said in a Financial Times editorial that Greece is heading for a disorderly debt default or at least a devaluation, and repeated his call for European Union leaders to adopt a "plan B" to stem contagion to the rest of the bloc.
EQUITIES TAKE A BEATING
The MSCI index of Asia-Pacific shares outside Japan fell 2.2 percent, while the Nikkei shed 1.4 percent. Stock markets in Australia lost 1.8 percent, South Korea declined 2.2 percent and Hong Kong gave up 1.9 percent.
The broader Asia index has snapped three straight weeks of gains on investor expectations that the second half held better prospects for risky assets than the first.
The outlook for Asian markets appears weak.
"Every time we seem to be getting momentum, the European debt issue seems to rear its ugly head, and we are at the mercy of that," said Lucinda Chan, division director at Macquarie Equities.
Spot gold held steady at $1,549 per ounce as investors fled riskier assets to buy bullion. Gold priced in sterling and euro both hit record highs on Tuesday, buoyed by worries about an escalating euro zone debt crisis.
Sterling-priced gold rose to an all-time high of 980.33 pounds an ounce, and euro-denominated gold hit a record of 1,114.29 euros per ounce.
Brent futures for August