SINGAPORE (BLOOMBERG) - Asian stocks fell after European leaders gave Greece until Sunday to submit a new set of reforms or be thrown out of the currency union.

The MSCI Asia Pacific Index dropped 0.3 per cent to 143.29 as of 9:01 a.m. in Tokyo. Sunday now looms as the climax of a five-year battle to contain Greece's debts, potentially splintering a currency that was meant to be irreversible and throwing more than a half-century of economic and political integration into reverse. German Chancellor Angela Merkel conceded that she is "not especially optimistic" that a solution can be found.

While the Standard & Poor's 500 Index climbed 0.6 per cent on Tuesday, the Stoxx Europe 600 Index sank 1.6 per cent. With markets in China and Hong Kong yet to open, futures indicated no pause in the selloff. Contracts on the FTSE China A50 Index dropped 1 per cent in most recent trading. Those on the Hang Seng China Enterprises gauge of mainland shares in Hong Kong, which entered a bear market Tuesday, tumbled 3.9 per cent.

"The Greece crisis has been causing volatility," Steven Milch, chief economist at Suncorp Wealth Management in Sydney, said by phone. "A negotiated outcome is better than a chaotic outcome that might arise if they exit from euro."

Japan's Topix index lost 0.4 per cent. South Korea's Kospi index gained 0.2 per cent. New Zealand's NZX 50 Index was little changed. Australia's S&P/ASX 200 Index slipped 0.3 per cent.

The Hang Seng China Enterprises Index sank 3.3 per cent on Tuesday, bringing losses from a May peak to 20 per cent. The Shanghai Composite Index slid 1.3 per cent.

China suspended initial public offerings and brokerages pledged to buy shares in weekend measures aimed at halting the market rout. Mainland shares posted their biggest three-week slump since 1992 on concern leveraged traders are liquidating bets after valuations exceeded levels seen during China's stock- market bubble of 2007.

E-mini futures on the S&P 500 fell 0.2 per cent today.