Asian shares fall, eyes on German ruling, Fed meeting By Chikako Mogi TOKYO (Reuters) - Asian shares fell on Tuesday as investors repositioned before a German Constitutional Court ruling on the euro zone's bailout funds which could remove one risk for Europe, and a U.S. Federal Reserve meeting that may yield widely expected monetary easing. European equities were seen falling, with a 0.3 percent drop in U.S. stock futures suggesting Wall Street will start weakly. Financial spreadbetters called London's FTSE 100 .FTSE, Paris's CAC-40 .FCHI and Frankfurt's DAX .GDAXI to open down as much as 0.6 percent. .L .EU .N MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.5 percent, dragged lower by Chinese markets, with Shanghai shares .SSEC slumping 1.2 percent and Hong Kong equities .HSI dropping 0.7 percent as investors took some profits from a stimulus-led rally. Fundamentals haven't improved. In fact the latest set of data suggests the slowdown in the Chinese economy could yet worsen, so it's tough to look beyond the short term," said Edward Huang, equity strategist at Haitong International Securities. Japan's Nikkei average .N225 slipped 1 percent, weighed by declines in cyclical stocks which are generally linked to the health of the economy. .T Global shares and the euro had rallied last week after the European Central Bank outlined its bond-buying scheme designed to cap the rise in the borrowing cost of highly indebted euro zone states. "Investors are cautious ahead of major events later this week," said Lee Young-won, an analyst at HMC Investment & Securities. Germany's Constitutional Court is due to deliver a verdict on Wednesday that could pave the way for activating the European Central Bank's scheme, while the Fed's two-day policy meeting ends on Thursday. Europe continues to muddle through its crisis management, with Greece admitting it was having trouble convincing its foreign lenders to accept an austerity plan in exchange for aid to keep Athens solvent, but Spain's debt yields have stabilized below 6 percent on the ECB's bond-buying plan. Following Friday's disappointing U.S. jobs data, markets now believe the Fed will opt for some form of further monetary easing this week to help underpin the fragile U.S. recovery. But views remain mixed over the specifics. Some see a powerful move such as a third round of bond buying known as quantitative easing, while others expect alternative options such as extending its commitment to keep interest rates near zero beyond the current period through late 2014 into 2015. Reflecting growing investor jitters, the CBOE Volatility index .VIX posted its biggest daily increase in seven weeks on Monday. The euro inched up 0.1 percent to $1.2766, below Friday's four-month peak of $1.2815. "As long as there are expectations of quantitative easing by the Fed, the euro is likely to have some support," said a senior trader at a European brokerage. While equities pulled back, policy hopes supported Asian credit markets, tightening the spread on the iTraxx Asia ex-Japan investment-grade index by 2 basis points. With their European export markets in dire straits, Asian economies, led by China, are suffering. South Korea announced an incremental stimulus package on Monday to nurse its export-driven economy through prolonged hard times, a move many Asian governments are could follow as Europe slides towards recession and the United States struggles to grow. There were some bright spots amid general wariness. Big Japanese manufacturers turned optimistic for the first time in four quarters in July-September. And Australian business conditions improved in August as most firms enjoyed a rebound in sales and profits. Global monetary easing will boost prices of precious metals, nonferrous metals and oil where speculative money typically flows, Masayo Kondo, president of research firm Commodity Intelligence in Tokyo. U.S. crude eased 0.3 percent to $96.24 a barrel while Brent inched down 0.1 percent to $114.65 a barrel. <O/R> Spot gold added 0.3 percent at $1,729.36 an ounce, below a six-month high of $1,741.30 touched on Friday. <GOL/> Global grains prices have been bolstered by tight supplies as the worst drought in at least half a century hit U.S. farmland while Russia, the No. 4 wheat supplier, could limit exports. Australia, the world's No.2 wheat exporter, cut its forecast for wheat production in the 2012/13 crop marketing year and warned that yields could fall further. $1 = 0.7821 euros Additional reporting by Hyunjoo Jin in Seoul, Hideyuki Sano in Tokyo and Clement Tan in Hong Kong; Editing by Simon Cameron-Moore