Financial stocks were hit in line with their U.S. peers. Australia's Macquarie Bank, Singapore's DBS Group and Japan's largest lender Mitsubishi UFJ Financial Group all suffered declines.
Exporters such as Samsung Electronics, Sony and Toyota Motor all fell, with the strengthening yen adding to pressure on Japanese stocks. The yen extended gains as investors sold riskier assets funded by the low-yielding currency.
Japanese stocks slid nearly 3% as a strong yen sparked sales of exporters such as Sony, but later recouped some losses. The Nikkei 225 Average ended the session 1.6% lower. A few shares, such as Isuzu Motors, bucked the trend, largely due to individual factors -- in the case of Isuzu, upbeat mid-term financial targets -- as a wait-and-see mood spread out of concern about yen movements.
South Korea's KOSPI managed to reverse earlier sharp losses to end just a touch lower with exporters such as Samsung Electronics down, while concerns about credit conditions hurt financials such as Kookmin Bank. The recovery was remarkable considering the market was down by as much as 3.1%. Investors continued to pile into sectors such as steelmakers and shipbuilders whose earnings are less dependent on the United States and that are expected to
outperform this year.
Australia's S&P/ASX 200 Index closed 1.2% lower as financial firms such as Macquarie Bank fell on fresh credit worries, while firms with exposure to the U.S. dropped on concerns about the health of the world's biggest economy.
Hong Kong blue chips fell nearly 3% and China plays tumbled 5%, as declining global equities amid heightening credit worries prompted investors to cash in recent gainers like heavyweights China Mobile and China Life. China plays were hurt particularly by falls in Jiangxi Copper and Aluminum Corp of China, which had rallied to double-digit gains in the past few sessions.
Singapore's Straits Times Index declined 2.5% in early trade, but pared losses to finish 0.3% down. Banks led losses, with DBS, United Overseas Bank, and Oversea-Chinese Banking Corp all lower.
China's Shanghai Composite Index fell as much as 1.6% in the morning session, dragged down by a sharp drop in the Hong Kong share market and concern that domestic money market liquidity might tighten in coming months.