Asian stock markets tumbled on Tuesday, deepening sharp losses over the previous two sessions brought on by the historic US credit downgrade and the debt crisis in Europe.
As gold soared to record levels and crude prices fell, Asian stocks plunged despite G7 and G20 pledges to bolster the global economy and European Central Bank action on eurozone debt.
Tokyo fell 3.34 percent in the afternoon, Hong Kong lost 6.01 percent by the break, Sydney shed two percent and Seoul was 7.50 percent down while Taipei was one percent down. Shanghai fell 1.10 percent.
"It's a horrible place to be, dark days are upon us," said IG Markets institutional dealer Chris Weston from Melbourne. "How much further to fall is the question people are asking.
"People are trading on emotions at the moment rather than looking at the rational situation. There's widespread panic."
However, losses were not as steep as earlier in the day amid hopes that the panic-selling was easing.
Fear continued to dominate after the unprecedented downgrade of the United States by Standard & Poor's on Friday and a warning from the head of the European Commission Thursday that the debt crisis in the eurozone had likely spilt over into other economies.
With the US Federal Reserve board meeting later Tuesday, analysts hope any fresh policy decision will stem the global turmoil, which saw markets plummet around the world on Friday and Monday.
"S&P's downgrade of the US credit rating is yet another demand from Wall Street for QE3 (quantitative easing), which their own private bank, the Federal Reserve, will no doubt deliver shortly," said a fund manager at Grand Private Equities Wesley Legrand.
Shanghai shaved its morning losses after China announced inflation had hit 6.5 percent in July, a more than three-year high, amid hopes that the price rises had levelled out and the government would ease up on its rate hikes.
Asian stocks had been expected to open lower after Wall Street suffered its steepest one-day drop since late 2008 on Monday, with the Dow Jones Industrial Average falling 5.55 percent, while the broader S&P 500 fell 6.7 percent and the tech-heavy Nasdaq dived 6.9 percent.
Those losses were accompanied by a similar sell-off elsewhere, with Frankfurt down more than 5.0 percent, Paris down 4.7 percent and London diving nearly 3.4 percent.
There were also big losses in Latin America, with Sao Paolo down eight percent and Buenos Aires sinking more than 10 percent.
Gold, viewed as a safe haven in financial turmoil, hit a record high $1,754.24 an ounce in Hong Kong morning trade.
The euro bought $1.4191 in early Asian trade on Tuesday, almost flat from $1.4179 in New York late Monday, while it eased to 109.74 yen from 110.27.
The dollar stayed weak against the Japanese currency, trading at 77.31 yen against 77.68 yen in New York.
The debt fears also weighed on the Australian dollar, which fell below parity with the greenback for the first time since the Japanese earthquake in March.
In afternoon trade the "Aussie" was at 99.42 US cents, down from 103.55 cents on Monday.
Oil markets saw heavy selling. New York's main contract, West Texas Intermediate (WTI) for delivery in September shed $3.53, or 4.34 percent, to $77.78 per barrel, its lowest since September 30, 2010.
WTI prices had plunged $5.60, or 6.89 percent, to a low of $75.71 in intra-day trade before clawing back some ground.
Brent North Sea crude for September delivery slipped $2.60, or 3.01 percent, to $101.04. It had earlier fallen below $100 for the first time since February 8.
On other share markets, Wellington shed 3.87 percent, Manila lost four percent and Mumbai fell 2.34 percent in morning trade.