SINGAPORE, July 23 (Reuters) - The dollar fell to a record low against the euro on Monday and Asian shares lost steam after last week's rally, hit by escalating fears of a global spill-over from the U.S. mortgage crisis.

Safe-haven Japanese and U.S. government bonds traded at six-week highs as edgy investors shunned riskier assets.

The weaker dollar hit Asian exporters such as Canon Inc. and Honda Motor with overall sentiment also soured by losses on Wall Street and caution after China raised interest rates on Friday in another attempt to prevent economic overheating.

Oil prices fell from near-record highs on expectations of higher U.S. refinery output and after oil producer group OPEC said it stood ready to pump more oil if needed.

Gold traded near Friday's 10-week highs, underpinned by the soft dollar and heightened financial markets uncertainty.

European shares are seen extending Friday's losses. Spread betters in London expect Britain's FTSE 100 index to open between one point lower and four points higher, Germany's DAX 11-15 points down and France's CAC 40 7-10 points lower.

"There's some concern that the Dow will now resume its drift away from those all time highs above 14,000 and any selling on Wall Street will have the potential to weight further on stocks this side of the Atlantic," said Matt Buckland, trader at CMC Markets.

Tokyo's Nikkei fell 1.1 percent to four-week closing low, led lower by exporters such as Canon Inc., which fell 1.3 percent and Honda Motor, down 2 percent.

Japan's top construction machinery maker Komatsu fell 1.3 percent after disappointing results from industry leader Caterpillar Inc.

U.S. FEARS

Mixed earnings on Friday sapped Wall Street optimism about corporate profits and brought U.S. debt market fears to the fore again, knocking more than 1 percent off main stock indexes

Beijing's interest rate rise also weighed on firms exposed to the Chinese market, such as South Korea's steel maker POSCO, by raising the prospect of softer demand from the world's fourth-biggest economy.

But gains by leading banks such as Kookmin Bank helped drive the main KOSPI index up 0.5 percent to another all-time high.

Elsewhere in Asia, markets largely took China's long-awaited rate rise and Wall Street losses in their stride, pushing the MSCI's measure of Asia Pacific performance outside of Japan up 0.3 percent to a record high

Australia and Singapore underperformed, down 0.5 and 0.4 percent respectively, while Hong-Kong edged up 0.1 percent and Taiwan rose 0.4 percent.

Japanese government bonds hit a six-week high tracking gains in U.S. bonds on Friday after investors dumped stocks and flocked to the safety of government debt.

WEAK DOLLAR

Fears that losses in the U.S. subprime mortgage market, which targets poor credit borrowers, may hurt consumption and sap growth in the world's biggest economy continue to send ripples through world markets, pushing the dollar lower.

The U.S. currency hit another all-time low against the euro of around $1.3845 in early Asian trading on Monday and at 0600 GMT hovered just above that level.

The dollar also hit a six-week low against the yen at 120.80 yen on the electronic trading platform EBS. Some traders attributed the yen's rise to the unwinding of carry trades, where investors borrow in low-yielding currencies such as yen to invest in riskier, but higher-yielding assets.

Oil prices eased on Monday after the president of the Organization of the Petroleum Exporting Countries told Reuters on Sunday the group was concerned about a possible impact of costly oil on economic growth and was ready to pump more oil if needed.

London Brent crude fell 32 cents to $77.32 a barrel by 0600 GMT and U.S. crude traded 27 cents lower at $75.52. But analysts saw the reprieve as short-lived given persistent worries whether supply can keep up with demand from rapidly growing economies such as China.