(Updates levels throughout; adds analyst comment)

* Dollar near lowest since November 2016 vs yen

* MSCI Asia ex-Japan near lowest since mid-February

* Trump's tariff threat met with warnings of retaliation

* Italian exit polls point to hung parliament

By Swati Pandey

SYDNEY, March 5 (Reuters) - Asian shares hovered near 2-1/2 week lows and the safe-haven yen rose on Monday amid fears of a global trade war, while the euro pared gains as investors worried Italy's national elections could deliver an anti-establishment government.

Italy's poll produced no outright winner on Sunday, according to exit polls that pointed to possible political gridlock, with voters backing anti-establishment and far-right parties in record numbers.

After a see-saw start, the euro eased back to $1.2320 from a two-week high of $1.2365 amid talk the eurosceptic 5-star party could form a coalition government.

Supporting the euro was the revival of Germany's grand coalition over the weekend, meaning Chancellor Angela Merkel's conservatives will form a new government more than five months since the country's inconclusive election.

"The market remains extremely choppy," said Stephen Innes, head of trading at OANDA.

"The results are initially interpreted as mildly supportive for the euro given the worst case scenario - the anti-establishment coalition in office was averted - but is reversing out the initial wave of positivity," Innes added. "...the market will look to fade upticks given the political malaise in Italy will play on."

The yen got a lift from safe-haven flows as risk sentiment soured after U.S. President Donald Trump proposed tariffs on imported steel and aluminium, rattling financial markets.

The dollar fell for a fourth straight session to stand at 105.60 yen, but was slightly above Friday's low of 105.23, a level not seen since November 2016.

Asian shares started the week on the backfoot despite a late rebound on Wall Street on Friday as investors worried a U.S.-led trade war could derail economic momentum around the world.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat near the lowest since mid-February.

Japan's Nikkei slipped 0.2 percent while South Korea's KOSPI was flat and Australian shares declined 0.3 percent.

U.S. stock futures did not inspire much confidence, with S&P E-Minis down 0.1 percent.

News over the weekend suggested that Trump was going ahead with his threat, while there was no indication that allies would be excluded from the tariffs planned on imported steel and aluminium.

Canada and Mexico have threatened retaliation, and the European Union said it would apply 25 percent tariffs on about $3.5 billion of imports from the United States if Trump carried out his threat.