Britain will not seek a Brexit deal that leaves it "half in, half out" of the EU, May will say later in the day, according to her office, in a speech setting out her 12 priorities for upcoming divorce talks with the bloc.
Those priorities will include leaving the EU's single market and regaining full control of Britain's borders, media reported, reinforcing fears of a 'Hard Brexit' which has pushed the pound to some of the lowest levels against the U.S. dollar in more than three decades and weighed on other riskier assets such as stocks.
Growing uncertainty over the policies of Donald Trump have also hurt equities, which had rallied in many parts of the world thanks to speculation that the U.S. President-elect would enact bold stimulus and reflationary measures once in office.
"Markets affected by the twin political black swans of 2016 - the Brexit vote and Trump win - remain volatile and uncertain," wrote David Croy, senior rates strategist at ANZ.
U.S. stock futures dipped 0.3 percent. Wall Street was closed on Monday for Martin Luther King Day.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.1 percent, while Japan's Nikkei brushed a five-week low and was last down 0.4 percent.
"Europe is going to be dominating the headlines today, and the focus is justifiably on May's speech, and also on the interviews that Trump gave to European newspapers," said Stefan Worrall, director of Japan equity sales at Credit Suisse in Tokyo.
Sterling hovered around $1.2050 , in striking distance of $1.1983, its lowest since Oct. 7 struck the previous day.
The weaker pound helped take some pressure off of the greenback, which has been burdened by investor uncertainty over whether the incoming Trump administration would actually be able to implement effective policies.
The euro was little changed at $1.0604 after dipping about 0.4 percent overnight.
The yen benefited from its safe-haven status, holding its gains versus against the dollar, euro and sterling.
The dollar was steady at 114.200 yen having gone as low as 113.610 the previous day, its weakest since Dec. 8.
The Australian dollar, sensitive to shifts in risk sentiment, was down 0.1 percent at $0.7472. Higher iron ore prices had taken the Aussie to a one-month high of $0.7519 last week.
Gold was helped by the heightened risk aversion stemming from Brexit and uncertainty over Trump's plans. Spot gold was $1,203.93 an ounce after climbing to $1,207.86 overnight, its highest since late November.
Crude oil was higher as Saudi Arabia's steady commitment to reduce production offset a report forecasting U.S. output would rise again this year. [O/R]
U.S. crude was up 0.3 percent at $52.51 a barrel .
(Reporting by Shinichi Saoshiro; Additional reporting by Lisa Twaronite in Tokyo; Editing by Eric Meijer and Kim Coghill)
By Shinichi Saoshiro