The heavy losses followed a sell-off on Wall Street and in Europe, while Spanish bond yields sat at dangerous highs.
Tokyo fell 1.05%, or 90.46 points, to 8,542.73, and Sydney shed 0.44%, or 17.9 points, to 4,076.3. Seoul was flat, losing 1.39 points to close at 1,843.47.
Hong Kong shed 0.32%, or 60.70 points, lower at 18,629.52, while Shanghai fell 0.52%, or 12.44 points, to 2,372.23.
Spain has moved into focus as it struggles with a banking crisis while battling record unemployment, a huge public deficit and a recession, raising concerns of a financial collapse.
The interest rate on its benchmark 10-year bonds surged to 6.703% yesterday, which is considered unsustainable and around the levels seen in Ireland, Greece and Portugal ahead of their bailout.
The difference between yields on Spanish bonds and rock-solid German debt is now 5.41 percentage points, a euro-era record.
And while borrowing costs soar Prime Minister Mariano Rajoy’s government has been asked by lender Bankia for 19 billion euros (US$23.5 billion) in capital.
“Uncertainty is persistently strong over Spain’s situation (and) markets are very susceptible to worrisome developments,” said Yoshihiro Okumura, general manager of research at Chibagin Asset Management.
On currency markets the euro fell to US$1.2360 in Tokyo morning trade – a new 22-month low.
But in the afternoon it clawed back to hit US$1.2405, compared with US$1.2366 in New York late yesterday.
It was also worth 98.80 yen, from 97.76 yen. The unit has not fallen below the 97-yen level since 2000.
The dollar weakened to 78.75 yen from 79.06 yen.
Asia’s sell-off followed big losses on Wall Street where the Dow sank 1.28%, the S&P 500 lost 1.43% and the Nasdaq dropped 1.17%.
There were also huge falls in Europe, with Madrid’s IBEX 35 index plunging to a nine-year low. However, European shares edged slightly higher in early trade today.
Oil was higher today. New York’s main contract, West Texas Intermediate crude for delivery in July was up 20 US cents to US$88.03 a barrel while Brent North Sea crude for July rose 29 US cents to US$103.76 in the late afternoon.
Traders will be looking to the United States for some good news tomorrow when crucial non-farm payroll figures will give an indication as to the state of the world’s number one economy.
Gold was at US$1,563.22 an ounce at 0830 GMT, compared with US$1,549.12 late yesterday.
In other markets:
- Taipei rose 0.55%, or 39.70 points, to 7,301.50. Taiwan Semiconductor Manufacturing Co surged 4.16% to Tw$85.1 while leading smartphone maker HTC ended 1.42% higher at Tw$430.0.
- Manila closed 1.45%, or 72.91 points, higher at 5,091.23. The market was lifted by the announcement that the economy grew 6.4% in the first quarter of the year, better than expected. DMCI Holdings gained 1.76% to 57.95 pesos while SM Investments rose 2.4% to 704 pesos.
- Wellington rose 0.20%, or 6.94 points, to 3,488.29. Fletcher Building gained 0.48% to NZ$6.29, Telecom was up 1.18% to NZ$2.58 and Contact Energy gained 1.46% to NZ$4.88.