TOKYO (Reuters) - Asian shares gave up earlier gains on Monday after the China HSBC flash manufacturing purchasing managers index (PMI) fell to an eight-month low in March.

The preliminary reading of 48.1 fell from February's final reading of 48.5. The "flash" March index also showed new orders slid for a fourth consecutive month to 46.9 - its lowest point since July 2013 - while output fell to 47.3, the lowest since September 2012.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent after the China data's release after gaining as much as 0.5 per cent.

Japan's Nikkei share average bucked the trend and gained 1.3 per cent.

"The concerns around China's growth are likely to remain over the coming weeks as the slowdown in orders over the winter months and Chinese Luna New Year filter out," Eva Lucas, market strategist at IG in Melbourne, wrote in a note to clients.

The Australian dollar, a liquid proxy for China, fell around a quarter of a US cent after the disappointing reading.

The yuan suffered its biggest weekly drop against the dollar last week as policymakers try to flush out hot money from the market.

Overall, appetite for risk remained somewhat suppressed as geopolitical tensions continued to simmer after NATO's top military commander said on Sunday Russia had built up a "very sizeable" force on its border with Ukraine, and Moscow may have a region in another ex-Soviet republic, Moldova, in its sights after annexing Crimea.

The euro edged away from a recent low hit against the dollar as traders continued to recalibrate expectations around US monetary policy after Fed Chair Janet Yellen last week raised the prospect of an earlier start to interest rate hikes.

It was US$1.3788 after hitting a two-week low of US$1.3749 on Thursday.

Investors snapped up the greenback last week as they swiftly brought forward the risk of a US interest rate hike early in 2015 after Yellen surprised markets by raising the prospect of such a move.

The dollar rose 0.2 per cent to 102.495 yen, with the Japanese currency continuing to draw safe-haven bids as investors continued to fret over the crisis in Ukraine.

Currency markets were also keeping an eye on emergency talks between leaders of the Group of Seven leading nations scheduled to take place later in the session at The Hague, where the G7 will probably discuss how to exert further pressure on Russia and at what potential cost.