Oil rose towards a 2-1/2-year high and stocks around Asia fell as investors shunned risky assets on concern that the unrest in Libya would spread through the Middle East and disrupt fuel supplies.

The drop in stocks was led by a 1.3 percent loss in Singapore, with most other markets falling less than 1 percent. The Thai market ended down 0.7 percent, with even upstream oil firms giving up some of their recent gains.

"The market is concerned by possible prolonged oil tension. Selling is broad-based and investors are reluctant to buy energy stocks," said Kitichan Sirisukarcha, an energy analyst at broker Kim Eng Securities in Bangkok.

However, the Thai stock market saw only modest foreign outflows of $3 million, the exchange said.

The MSCI index of Asia-Pacific stocks outside Japan had fallen 0.9 percent by 0923 GMT.

Market volume was low. Turnover on the Thai market, for example, dropped to just 0.6 times its 30-day average, followed by Malaysia's 0.8 and Singapore's 0.9.

The region mostly saw foreign outflows, led by Malaysia's $54 million, its exchange said. Indonesia saw $11.2 million in outflows and the Philippines $6 million, according to Thomson Reuters data.

The Philippine stock market, Southeast Asia's worst performer this year, suffered net foreign outflows for a second month in February. Indonesia and Thailand both gained foreign inflows after net selling in January.

The oil price is a key risk to the region's outlook as it adds pressure to inflation, with policy makers in both Indonesia and Thailand expected to raise interest rates on Friday and next Wednesday respectively.

Among index heavyweights, Singapore Telecommunications, Southeast Asia's largest telecommunication company, dropped 3 percent and Malaysian lender CIMB Group Bhd ended 0.7 percent lower.

Thailand's top energy firm, PTT, lost 1.5 percent and its exploration flagship, PTT Exploration and Production, lost 0.8 percent.