Asian markets extended Monday's losses amid sharp falls in commodities and deepening fears of a weakening global economy.
Oil prices hovered around $120 a barrel in the Asian session, after falling more than $1 overnight to head towards Monday's three-month low below $120, while gold prices skidded below the $900 an ounce mark.
The pullback in oil and metals prices pressured resources firms in Australia. The S&P ASX 200 came off a low of 2.5 percent in the day to close 1.4 percent down. BHP Billiton shed 6.6 percent and Woodside Petroleum lost 5.2 percent as oil prices slipped to around $120 a barrel on worries that a global economic slowdown would dent demand. Bank stocks capped the market's losses, after the central bank kept interest rates on hold at 7.25 percent but is seen as likely to ease rates in the future.
Japanese energy stocks were not spared from the commodities selloff as Inpex Holdings dropped more than 4 percent. This added pressure on the Nikkei 225, which closed 0.14 percent after a choppy session. Buying in exporters like Toyota Motor and Sony lent support to the market due to the weaker yen.
Credit Saison soared more than 12 percent after financial sources said the consumer credit company was in merger talk with Orix. Orix shares rose under 5 percent.
The Hang Seng Index fell 2.5 percent, crossing the 22,000 support level, dragged lower by dips in energy and resources stocks. Gold miner Zijin Mining plunged nearly 12 percent at one point as the precious metal fell below $900 an ounce on weaker oil prices, while coal miner China Shenhua Energy lost 8.9 percent. Shares of Bank of East Asia tumbled after the Hong Kong-based lender posted a dismal 52-percent drop in first-half net profit to HK$894 million ($114.6 million). Financial giant HSBC slid after reporting a 28 percent drop in first-half profit as it took a $14 billion hit from bad debts on U.S. home loans and asset write-downs.