- Japan's Nikkei 225 dropped more than 3 percent.
- Elsewhere in Asia, stocks also saw declines.
- Stocks stateside fell sharply last Friday as an inverted yield curve stoked fears that an economic recession is on the horizon.
Shares in Asia fell sharply on Monday after disappointing economic data from Europe and a closely-watched signal of potential recession in the U.S. appeared on Friday.
The broader MSCI Asia-ex Japan index fell 1.65 percent to 521.00, as of 3:28 p.m. HK/SIN.
The Nikkei 225 plunged 3.01 percent to close at 20,977.11, as shares of index heavyweights Softbank Group and Fanuc plummeted 5.01 percent and 3.84 percent, respectively. The Topix index also fell 2.45 percent to finish its trading day at 1,577.41.
Shares in mainland China tumbled on the day, with the Shanghai composite dropping 1.97 percent to 3,043.03 and the Shenzhen component declining 1.8 percent to 9,701.70. The Shenzhen composite fell 0.908 percent.
In Australia, the fell 1.11 percent to close at 6,126.20.
Stocks in Thailand fell as the index declined around 0.8 percent in afternoon trade after tumbling 1 percent earlier, its largest intraday decline in over a month, according to Reuters. The move came ahead of the release of results from the country's first election since a 2014 coup that saw a military government seizing power.
Stocks stateside fell sharply on Friday as an inverted yield curve stoked fears that an economic recession is on the horizon. Disappointing economic data released Friday out of Europe, coupled with a downgraded economic outlook from the Federal Reserve, added to those concerns.
The spread between the 3-month Treasury bill and the 10-year note went negative on Friday for the first time in more than a decade. Investors consider this to be a signal that a recession may be coming soon.
The inversion in the yield curve was described by one group of strategists as the "biggest development in financial markets for some time."
"While we prefer the ten‑year minus two‑year measure of the yield curve for predicting U.S. economic recessions some twelve‑to‑eighteen months in advance, the inversion of the tens‑bills curve is an ominous sign," strategists at the Commonwealth Bank of Australia said in a morning note.
"At this stage, we are not predicting a U.S. recession, but we have already concluded and published that the Fed's tightening cycle is finished," they said.
An inverted yield curve occurs when short-term rates surpass their longer-term counterparts, putting a damper on bank lending profits. An inverted curve is also considered a recession indicator.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.613 after bouncing from lows below 96.3 in the previous session.
The Japanese yen, widely viewed as a safe-haven currency, strengthened to 110.05 against the dollar from lows above 110.6 last Friday. The Australian dollar changed hands at $0.7083 after seeing highs above $0.714 last week.
Meanwhile, top U.S. officials from Washington are also set to visit Beijing later this week to resume trade negotiations with China.
China and the U.S. are expected to strike a deal sometime in April, with the uncertainty surrounding the trade fight between the two economic powerhouses weighing on investor sentiment for much of 2018.
Oil prices slipped in the afternoon of Asian trading hours, with the international benchmark Brent crude futures contract shedding 0.49 percent to $66.70 per barrel. U.S. crude futures also declined 0.66 percent to $58.65 per barrel.
— CNBC's Fred Imbert contributed to this report.