Details were in short supply about the U.S. Treasury's revamped rescue plan for financial institutions, sending disappointed investors searching for safety in assets such as gold after Wall Street dove 4 percent overnight.
A $838 billion economic stimulus bill passed the U.S. Senate but faced further congressional dealmaking that could stretch into next week before it becomes a law.
With trade protectionism a creeping fear in Europe and exports in Asia collapsing, malaise sank into markets and weighed on commodity prices.
"It's just a matter of trying to identify how deep an impact the global situation is going to have domestically, and unfortunately the picture going forward for all of us still remains quite unclear," said Jamie Spiteri, manager of institutional sales at Shaw Stockbroking in Australia.
The MSCI index of stocks in Asia Pacific outside Japan slid 2.4 percent, down for a second day. Japan's markets were closed for a public holiday.
South Korea's KOSPI fell 1.7 percent, with shares of Shinhan Bank and Woori Bank were among the heaviest drags on the index.
Hong Kong's Hang Seng dropped 3.25 percent and was the biggest decliner in the region after it snapped a five-day winning streak. Shares of index heavyweight HSBC, Europe's biggest lender, were down 4.5 percent, one of the largest percentage losers in the index.
Regional stocks had risen some 9 percent in the last two weeks, largely ignoring a raft of negative news, on optimism about the White House bank rescue and on hopes that falling global industrial output may be close to bottoming out. But those hopes were fizzling quickly.
"The economic shock is so strong that policy reactions can only buffer its impact, but the outlook for the coming months remains very challenging, and further correction of asset prices/most Asian currencies is likely to happen in coming months," said Sebastien Barbe, a currency strategist with Calyon in Hong Kong.
"We still expect most currencies in Asia to correct by about 10 percent versus the U.S. dollar in the coming three months," he said in a note.
The U.S. dollar extended a broad rally from overnight. The euro was down 0.3 percent to $1.2873 but rose 0.4 percent against the Swiss franc .
Gold was steady at around $912.60 an ounce after jumping more than 2 percent overnight as market volatility increased, while copper traded in Shanghai dropped 3 percent, ending six-day string of gains.
Oil prices ticked up 38 cents to $37.93 a barrel after tumbling $2.01 overnight.
Ali al-Naimi, Saudi Arabia's oil minister, warned of further erratic price action because prices were in his view unjustifiably low.
"If today's low prices continue long enough, they will sow the seeds for future price spikes and volatility," he said in a keynote address to the CERAWeek conference in Houston.
In the bond market, the benchmark 10-year U.S. Treasury yield , which moves in the opposite direction of the price, ticked up to 2.82 percent from 2.81 percent overnight.
The yield tumbled 18 basis points overnight after the unveiling of the bank rescue plan.
Wednesday February 11
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