By Hideyuki SanoTOKYO (Reuters) - Asian stock markets risked slipping to two-month lows on Wednesday as crumbling oil prices took a toll on energy and resource shares, with cooling demand from China putting more pressure on resources-reliant economies.MSCI's broadest index of Asia-Pacific shares outside Japan was flat but stood barely above its November trough, a break of which would take it to its lowest level since early October.Japan's Nikkei shed 0.6 percent to hit a three-week low.Overnight on Wall Street, the S&P 500 lost 0.7 percent, with the S&P energy sector falling 1.5 percent in its fifth straight day of declines. The sector has fallen 10.4 percent since Dec. 1.The Organization of Petroleum Exporting Countries' decision on Friday not to cut its production target has rattled commodity traders, sparking concerns global oil producers will pump even more crude into an already oversupplied market. That has shaken up oil prices, which is wobbling near seven-year lows hit on Tuesday.Brent futures fell 1.2 percent in overnight trade to settle at $40.26 per barrel, after hitting a low at $39.81, the first time it fell below $40 since February 2009. They have fallen almost 30 percent so far this year after a fall of nearly 50 percent in 2014.U.S. benchmark West Texas Intermediate (WTI) futures sunk to as low as $36.64 earlier on Tuesday and last stood at $38.12."The fall is driven by likely increases in supply after the OPEC meeting and as Iran will return to the market after a lift of sanctions. On the other hand, demand doesn't look strong as many economies face downside risk," said Shuji Shirota, head of macro economics strategy at HSBC Securities."At the moment, it is hard to see where a bottom will be."Soft trade data from China on Tuesday cemented concerns over cooling demand from the world's second largest economy.Still, analysts say opportunistic Chinese buyers may have merely been taking advantage of a fresh slump in commodity prices, and will likely continue to export large quantities of finished products such as steel and diesel fuel because demand is not strong enough at home.China's inflation data due later in the day will provide another gauge on the strength of domestic demand.With oil prices hovering below breakeven levels for many producers, investors are trying to cut exposures to the sector, hitting countries that depend on revenues from oil and other resources.MSCI's gauge of emerging market shares fell to two-month lows.On Tuesday, Brazilian shares edged near their six-year low touched earlier this year while shares in Qatar fell 3.1 percent to a two-year low and Dubai shares also came close to a one-year low touched December last year.Investors have another reason to be cautious on risk assets as the U.S. Federal Reserve is widely expected to raise interest rates for the first time in almost a decade next week.That prospect has provided broad support to the dollar, but currency traders are starting to wonder if the Fed liftoff is already fully priced in.The dollar soared against oil-linked currencies on Tuesday, touching an 11-year high against the Canadian dollar and a 13-year high versus the Norwegian crown , but its performance wasn't as stellar against other major rivals.The euro traded at $1.0894 , maintaining its 0.5 percent gains on Tuesday, and edging back toward a one-month high of $1.0981 hit on Thursday after the European Central Bank's stimulus turned out to be smaller than expected.The dollar also edged back against the yen to 122.80 yen from this week's high of 123.48 yen, turning negative on the week.(Editing by Shri Navaratnam)Join the conversation about this story Click here to read full news..