Asian markets were hit hard by news the U.S. Senate had failed to reach an agreement on a bailout planto rescue the ailing Big Three automakers. Losses in the Japanese market accelerated in the afternoon as a sharp selloff in key auto stocks put pressure on the market.
Gloomy comments from the head of U.S. bank JPMorgan Chase Jamie Dimon, who told CNBC in a live interview that trading in the last two months were "terrible", did not help the trading sentiment in Asia.
See the full story and videos of the interview here.
Japan's Nikkei 225 Average plunged as much as 6 percent but closed 5.6 percent lower led by steep losses in shares of carmakers. Toyoto Motor nosedived 10 percent while Honda Motor and Nissan Motor both dived around 12 percent.
Elpida Memory was a notable loser in Japan, tumbling more than 11 percent at the finish as the cash-strapped chipmaker said it will redeem all or part of a recently issued convertible bond worth $540 million dollars, forcing it to look for alternative sources of financing.
South Korea's KOSPI closed 4.4 percent lower following five consecutive gains. Hyundai Motor dropped 8 percent while Kia Motors plunged 10 percent.
The Bank of Korea's gloomy assessment of the economyadded to the selling pressure. It said economic growth will rise 2 percent -- its slowest pace in 11 years.
Stocks in Greater China also lost ground as investors digested news that the U.S. auto bailout talks had stalled. But the selling was more pronounced in Hong Kong where the Hang Seng Index fell 5.5 percent. The Shanghai Composite Index gave up 3.8 percent while the Taiwan Weighted Index lost 3.7 percent.
Losses in Australian stocks rolled further into negative territory at the close. The S&P/ASX 200 shed 2.4 percent. Financial stocks were also dented by comments from JPMorgan Chase'schief executive.
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But Gold miners were a bright spot in Australia as they benefited from a rise in gold prices, with Lihir Gold and Newcrest Mining both gaining ground on Friday.
In South-east Asia, Singapore's STI lost 3 percent led by a 10 percent drop in shippping-related stocks such as Cosco and NOL, amid fresh fears over the global economy.