Asian shares retreated on Tuesday, with fears of global economic slowdown showing no sign of abating as oil prices plunged on new worries about oversupply by top producers.Japan`s Nikkei .N225 fell 2.3 percent while Hong Kong`s Hang Seng Index .HSI fell 1.9 percent, with MSCI`s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS falling 1.1 percent after two days of gains since late last week.European shares are expected to follow suit. Spreadbetters are expecting Britain`s FTSE .FTSE and France`s CAC 40 to .FCHI fall by as much as 0.8 percent and Germany`s DAX .GDAX to drop 0.7 percent. "Wherever you look - China, oil and the U.S., there is no clear evidence of improvement in economic fundamentals. So in the near term, it is hard to expect risk asset prices to gain further after a spate of short-covering," said Tatsushi Maeno, managing director at PineBridge Investments.Crude oil prices have tumbled around 7 percent so far this week as top producers show no sign of cutting production.The chairman of Saudi Aramco said on Monday the firm is continuing to invest in oil and gas production capacity, despite cost-cutting because of low oil prices.Iraq`s output reached a record last month and a senior Iraqi official said Iraq may raise output further this year.Oil prices have fallen more than 75 percent from their 2012 peaks as global output was boosted by U.S. shale oil production and demand growth turned tepid, partially caused by the Chinese economy`s slowing growth. The massive price fall is putting huge pressure on profitability of energy firms worldwide, which are in turn slashing investment and cutting jobs. The U.S. S&P .SPX fell 1.6 percent to 1,877.08, led by a 4.5 percent drop in the energy sector .SPNY.Brent crude futures LCOc1, the global benchmark, dropped to $30 a barrel, falling 2.1 percent in Tuesday Asian trade, or 7.2 percent so far this week.Financial shares were also badly hit as investors grew concerned about their heavy lending to the energy sector.U.S. financial shares .SPSY in fact have fallen 12.8 percent so far this year, more than the energy sector`s 11.2.