Asian markets slipped into negative territory after a firm open Monday, as investors waited to see the details of the $700 billion rescue package agreed by U.S. lawmakers.
On Sunday a tentative deal was struck to push the package through, with a vote in both the Senate and the Congress expected as soon as Monday. Despite a possible boost from the rescue package, the impact on the U.S. economy of the re-ordering of the financial system could weigh on shares.
The U.S. dollar gained against the yen and the euro , while crude oil eased slightly in Asian trade.
Japan's Nikkei 225 Average fell 1.3 percent, down for a third day as investor caution about the implementing of a U.S. bailout plan for the financial sector outweighed initial relief that a deal was being done. Major banks shed much of their gains or sank into negative territory, while blue-chip exporters such as Toyota Motor fell sharply on worries about the global economic outlook.
Seoul shares also closed 1.3 percent lower as steep falls in the won currency fueled worries about volatility in domestic financial markets, sending banks sharply lower and stoking concerns about foreign currency-related losses. Hana Financial finished over 6 percent lower.
Australian shares closed 2 percent lower weighed down by miners such as Rio Tino which shed 5 percent. Banks were also pressured as the financial crisis spread in Europe, with Belgian-Dutch group Fortis and British mortgage lender Bradford & Bingley facing nationalization, and German lender Hypo Real Estate arranging a last minute deal to secure credit. But shares Centro Properties Group shot up to end 23 percent higher on news that it won an extension on a $1.3 billion loan.
Hong Kong shares fell over 4 percent after opening higher as investors brushed off news of a tentative agreement on the U.S. bank rescue plan and drove property stocks lower on a mortgage rate hike. China's Ping An Insurancedropped 10.5 percent on fears it will be hit by a larger-than-expected loss from its 5 percent stake of Fortis, which the Belgian, Dutch and Luxembourg governments agreed to bail out.
Singapore's Straits Times Index slid 1.9 percent, with blue chips sinking. Neptune Orient Lines submitted a binding bid to acquire the Hapag-Lloyd container shipping business but declined to provide details of its bid. NOL shares were 6.1 percent lower.
Chinese markets are closed for the Golden week holidays. They will reopen next Monday, October 6.