Japan's Nikkei 225 Average shed 1.5 percent with financial stocks and exporters taking the biggest hits. Property stocks also lost ground on concern about a weakening in the domestic housing market after tighter construction rules were introduced earlier this year. Shares of brokerages dropped on a news report that a
government tax committee has proposed letting temporary tax breaks on capital gains and dividend income expire.
South Korea's KOSPI closed 1.1 percent lower, as firms dependent on overseas demand such as techs lost ground amid persistent credit concerns, but Hynix Semiconductor rose on a report it might start a foundry business. Dongbu Steel soared almost 10 percent after it said it had begun construction of a $678 million steel plant in the port city of Dangjin, southwest of Seoul, after months of delay.
Australian shares finished 1 percent lower, down for the second session in a row, as persistent credit market worries saw financial firms such as Macquarie Group and the major banks under renewed selling pressure. Brambles bucked the downward trend to climb as much as 5.6 percent after it tipped strong 2008 profit growth.
Hong Kong blue chips closed nearly 4 percent down and China plays tumbled 4.7 percent as sharp losses on Wall Street prompted investors to sell across the board, driving shares below their 50-day moving average. Heavyweights China Mobile and PetroChina fell more than 5 percent at one point, while Hong Kong Exchanges and Clearing sank more than 6 percent earlier.
Singapore's Straits Times Index was over 1 percent lower with banks such as DBS Group and UOB taking the biggest hits.
China's Shanghai Composite Index fell nearly 1 percent, led by financial, property and steel shares as a sharp drop in Hong Kong stocks dampened sentiment and investors awaited a widely expected rate hike over the weekend.