Asian equity markets joined Wall Street's slump on Tuesday after oil markets resumed their downward spiral.
China's benchmark index tumbled as much as 6 percent in the last hour of trade after rallying to a three-and-half-year high of 3,091 points earlier in the session. Analysts attributed the selloff to profit-taking, expectations for 2015 gross domestic product to be lowered to 7 percent and liquidity fears regarding newcorporate bond market restrictions, announced on Monday.
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"An interesting development for risk in the near term will be what happens with China after Monday's alarming trade balance numbers. With both exports and imports declining, there are reports suggesting pressure is ramping up on the People's Bank of China to cut the reserve required ratio," said Stan Shamu, market strategist at IG.
Meanwhile, oil prices fell to new five-year lowsin the Asian trading session with Brent crude below $66 a barrel. Overnight, prices tumbled 4 percent on the back of bearish forecasts, which saw the the Dow post its biggest decline since October.