Tokyo: Asian stocks looked vulnerable to another sell-off on Tuesday, with investors gripped by fears of a hard landing for the Chinese economy, the world's most important growth engine.
Japan's Nikkei index fell 3.8% to six-month lows while the MSCI's broadest index of Asia-Pacific shares outside Japan hit fresh three-year lows.
Underlining concerns about China, Japanese Finance Minister Taro Aso said on Tuesday he hoped China would take action to stabilise its economy and that Tokyo had no plan for now to unveil its own new economic stimulus package.
MSCI's all country world index fell 3.8% on Monday to a 10 1/2-month low, its biggest fall in almost four years. It has lost 9.2% over five days.
Leading the losses were Chinese shares, which plunged more than 8% to post their biggest losses since 2007 on heightened worries that the Chinese economy was growing at a much slower pace than Beijing's 7% target for 2015.
Investors are also unnerved by uncertainty over US monetary policy. The Federal Reserve has said it plans to raise interest rates in 2015 for the first time in almost a decade.
The heavy fall in share prices worldwide over the past week has sharply reduced expectations of a US rate hike in September, but the outlook is far from clear.
"There seems to be no consensus with the Fed on whether they are worried about acting too prematurely or too late," Toru Yamamoto, chief bond strategist at Daiwa Securities, said in report.
The S&P 500 Index fell 3.9% to a 10-month low on Monday. The CBOE volatility index, a key measure of US equity volatility, shot up to more than 50 percent at one point for the first time since the 2008 global financial crisis.
Because some investors often fund their investment in risk assets by borrowing low-yielding euro and yen, the sell-off in shares helped send both currencies to seven-month highs.
The euro rose as high as $1.1715 and last stood at $1.1571 while the yen strengthened to 116.15 to the dollar before stepping back to 118.80.
The dollar was not helped by falls in US bond yields either, which diminishes the currency's yield attraction.
The 10-year US Treasuries yield fell to a four-month low of 1.905% in choppy trade on Monday and last stood at 2.0125.
Oil prices plunged more than 6 percent on Monday to 6 1/2-year lows after the dive in Chinese equities market.
US crude futures traded at $38.38 per barrel, near Monday's low of $37.75.
Brent crude futures fell to $42.23 on Monday and last stood at $42.69.
Brent stood not far from $36.20, its low hit in the aftermath of the global financial crisis, having fallen more than 66% from 2014's peak.
Copper, a good indicator of global economic activity because of its wide use, declined to a six-year low of $4,855 a tonne, falling more than 52% from its 2011.
The fall in commodity prices have hurt many commodity exporting countries' currencies.
The Australian dollar traded at $0.7177, having fallen to a 6-1/2-year low of $0.7044 on Monday.
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