Tokyo stocks led a rout across Asian markets Tuesday, while Japanese government bond yields turned negative, the dollar dived against the yen and gold jumped as fears about the global economy sent investors scrambling to safety.
While most the region was closed for the Chinese New Year holiday, trading remained thin but dealers took their lead from New York and Europe where banking shares were battered.
The sell-off is the latest this year, which has seen trading screens from Asia to the Americas awash with red.
The latest round of blood-letting came on the back of worries about the financial sector as the global economy slows down, without the support of the Federal Reserve's easy monetary policies.
London, Paris and Frankfurt all finished down more than 2.5 percent, with the German DAX ending below 9,000 for the first time since October 2014. And Wall Street's three main indexes all lost more than one percent.
Financials were in focus as a slowdown in the world economy raises the prospect of loan defaults and lower interest rates, which eat into their bottom lines.
In Asian trade, Tokyo slumped 5.4 percent by the close, putting the market back into bear territory, represented by a 20 percent fall from its recent highs.
Banking giants Mitsubishi UFJ and rival Sumitomo Mitsui Financial Group each tumbled almost nine percent. Major brokerage Nomura also tanked nine percent.
Exporters such as Toyota and Uniqlo operator Fast Retailing were each down more than six percent as they were hit by the strong yen.
The dollar sank to 114.70 yen, having sat above 120 yen just a week ago. The yen is considered a safe haven in times of uncertainty.
- 'Bucketload of concern' -
The flight to safety also saw Japanese government bond yields dive below zero, extending a downtrend sparked by the Bank of Japan's surprise move last month to slap a negative interest rate on some commercial lenders' deposits.
And gold, another commodity considered low risk, climbed 1.3 percent on Tuesday to $1,192.00.
Sydney shed 2.9 percent by the end and Wellington was 1.4 percent off. There were also hefty losses for Manila, Mumbai and Jakarta.
Shanghai, Hong Kong and Seoul, among others, were closed.
"Those off celebrating Lunar New Year will be happy their markets are closed," Chris Weston, chief markets strategist in Melbourne at IG Ltd., said in an email to clients.
"These markets need a strong shake-up and sharp downside move, followed by a wave of buying to settle things down," he said, according to Bloomberg News.
"But until that comes there will be no clarity, absolutely no confidence and a bucketload of concern. It almost feels as though the markets are pushing central banks into some kind of action, but they don't know exactly what it is they want."
However, while regional equities were being battered, oil prices staged a rebound after US benchmark West Texas Intermediate fell back below $30 a barrel on Monday.
WTI was up one percent at $30.00 and Brent added 0.7 percent to $33.12.
Both contracts lost more than 3.5 percent Monday after weekend talks between OPEC kingpin Saudi Arabia and Venezuela dashed hopes for a reduction in production, with Riyadh unwilling to move from its position.
- Key figures around 0630 GMT -
Tokyo - Nikkei 225: DOWN 5.4 percent at 16,085.44 (close)
Sydney - S&P/ASX 200: DOWN 2.9 percent at 4,832.10 (close)
Euro/dollar: UP at $1.1210 from $1.1193 on Monday
Dollar/yen: DOWN at 114.70 yen from 115.84 yen
New York - Dow: DOWN 1.1 percent at 16,027.05 (close)
London - FTSE 100: DOWN 2.7 percent at 5,689.36 points (close)