Asian markets extended losses Tuesday, in the wake of Wall Street's biggest tumble in a month, while government bonds and the yen rose, as investors cut down on riskier assets, demanding evidence of a sustained recovery.
Weak U.S. manufacturing and housing gauges weighed on sentiment, while the European Central Bank renewed fears about banking stability after it said euro zone financial firms may need to write down another $283 billion in bad loans over the next 18 months.
Oil fell below $70 a barrel, down for a third day after hitting a seven-month high last week, with sagging global equities increasing investors' concerns about how quickly commodity prices had risen at this stage of the economic cycle. The U.S. dollar weakened against the yen spacer, while the euro spacer also fell against the yen. But the euro spacer rose against the dollar after testing a technical obstacle around $1.3750.
Japan's Nikkei 225 Average spacer fell 2.9 percent, its worst one-day percentage loss in over two months, with shares sold across the board on growing investor caution about the global economy as the yen advanced. Mitsubishi Corp and other resource shares took a hit from lower oil and metals prices, while property shares tumbled on profit-taking after rallying for a month.
South Korea's KOSPI closed nearly 1 percent lower, with commodities issues falling after their latest streak of gains, while news index compiler MSCI's decision not to upgrade South Korea to developed market status in its annual review added pressure. But online gaming issues rallied on the back of earnings hopes.
Hong Kong shares pulled back 3 percent as investors reassessed risk assets following weak economic data from the U.S., while resource-linked counters were hard hit by falling commodity prices. Ping An extended Monday's losses after agreeing to increase its stake in mid-sized lender Shenzhen Development Bank to close to 30 percent, from the less than 5 percent it holds in a deal deemed expensive by analysts.
Singapore's Straits Times Index fell 2 percent. Singapore Airlines, dropped 2 percent after saying it filled 62.8 percent of the space available on its planes for passengers and cargo in May.
China's Shanghai Composite Index slipped almost 1 percent, but outperformed regional markets on support from positive signs for industrial output in June. Brokerage shares bucked the negative trend, with CITIC Securities rising 2 percent, buoyed by expectations of an imminent restart of IPOs that would boost their business.