Asian stocks markets were thrown into a tailspin on Tuesday as flustered investors fearing a possible global recession continued to flee stocks. Indexes in South Korea and Hong Kong sank about 7 percent.
Oil prices tumbled to their lowest in almost a year to near $76 a barrel on expectations that a slowing global economy could crimp demand for fuel. The dollar was lower against the yen and the euro.
The sell-off, which adds to sharp losses in the past few days, comes after the Dow Jones industrials fell 634.76 points on Monday, the sixth-worst point decline for the Dow in the last 112 years, in response to the Standard and Poor's downgrade of the U.S. credit rating.
Michael McCarthy, chief strategist at Sydney-based stockbroker CMC Markets, attributed the market turbulence to fears that the struggling U.S. economy is quickly losing momentum.
"We're clearly in fear territory," McCarthy said. "The major driver here seems to be weakness in the U.S. economy. There are fears that it's starting to stall and if that's the case, the whole global growth scenario could fall over."
Japan's Nikkei 225 index dived 4.4 percent to 8,694.31 and Hong Kong's Hang Seng plummeted 6.7 percent to 19,110.39.
Japanese export shares continued to capsize on a strengthening yen, which makes products more expensive overseas.
Consumer electronics giants Sony Corp. and Sharp Corp. dropped 4.2 percent and 5.8 percent respectively. The country's powerhouse vehicle makers were also battered. Toyota Motor Corp. lost 4.9 percent, while rival Honda Motor Corp. slid 6 percent. Nissan Motor Corp. sagged 4.8 percent.
Trading on South Korea's Kospi was briefly suspended after sinking sharply — at one point down 8.6 percent to 1,708.91. It later pared losses to a 7 percent fall. Hynix Semiconductor, one of the world's leading memory chip makers, shed 10.1 percent, while Samsung Electronics, the top global manufacturer of flat screen televisions, crumbled 7.6 percent.
Elsewhere, Australia's benchmark S&P/ASX-200 index lost 3.2 percent to 3,856.80. Taiwan's TAIEX dropped 3.4 percent and New Zealand's benchmark NZX 50 index shed 3.9 percent. Mainland China's Shanghai Composite Index lost 1.3 percent to 2,492.83.
Jackson Wong, vice president of Tanrich Securities in Hong Kong, said the sell-off was creating opportunities for sophisticated investors to buy at bargain prices. What was unclear, he said, was when those investments might bear fruit.
"It's still very hard to predict how the U.S. market will do," Wong said. "When the dust settles, if the situation doesn't get worse in the U.S. or Europe, the situation will rebound. But the U.S. has to stabilize."
Worries about the U.S. economic recovery have been building since the government said that economic growth was far weaker in the first half of 2011 than economists expected. Intensifying concerns were reports showing that the manufacturing and services industries barely grew in July, although job growth was better than economists expected last month.
Investors are also worried that Italy and Spain could become the next European countries to have trouble repaying their debts. Greece, Ireland and Portugal have already received bailout loans because of Europe's 21-month-old debt crisis.
The fears have pushed investors to shun Spanish and Italian bonds, which have led to higher yields and in even higher borrowing costs for the two countries.
The European Central Bank stepped in Monday and bought billions of euros worth of their bonds. The move helped to lower yields on Spanish and Italian bonds, at least temporarily.
Benchmark oil for September delivery fell $4.74 to $76.57 a barrel in electronic trading on the New York Mercantile Exchange.
That is the lowest settlement price of the year for crude, but it's still higher than the $71.63 per barrel low of the past 12 months. Oil hit that on Aug. 24 of last year, when a combination of disappointing economic news and abundant supplies drove down prices. Crude fell $5.57, or 6.4 percent, to settle at $81.31 per barrel on the Nymex on Monday.
In currencies, the dollar weakened to 77.12 yen from 77.70 yen late Monday in New York. The euro rose to $1.4223 from $1.4196.