Stocks in Japan hit a 25-year low on Tuesday and most major indexes in the Asia-Pacific region also fell, caught in the downdraft of risk aversion sparked by renewed concern over the global financial sector.
Japan's Nikkei stock index closed down 0.69% to 7,229.72. At one point during the morning, the Nikkei dipped below a 26-year closing low of 7,162.90.
The broader Topix index of all first-section shares lost 7.79 points, or 1.06%, to end at 726.80.
In New Zealand, share prices closed 2.56 per cent down in light trade on Tuesday, as a lack of confidence in the market saw investors take to the sidelines, dealers said.
The benchmark NZX 50 index dropped 63 points to 2417 on turnover worth $41 million. There were just 14 rises and 97 falls.
Top stocks were all down. Contact Energy fell 22 cents to $5.49, Fletcher Building was down 8c at $5.15 and Telecom was 4c lower at $2.26.
The Australian share market hit a fresh five-year low, but the central bank's expression of confidence in the Australian economy helped the market recover from a much poorer start.
The local bourse dropped sharply in early trading after the Dow Jones industrial average in the United States plunged 299.64 points, or 4.24%, to close at 6,763.29.
However, investors were buoyed by comments made by the Reserve Bank of Australia as it left the cash interest rate unchanged at 3.25%.
The RBA said that while there was evidence that the Australian economy was weak, it believed recent policy actions taken by itself and the federal government would support domestic demand in the period ahead.
At the 1615 AEDT close, the benchmark S&P/ASX200 index was down 30.9 points, or 0.95%, at 3,219.2 - its lowest close since 16 December 2003.
The broader All Ordinaries index lost 32.4 points, or 1.01%, to 3171.4 - its lowest close since 1 October 2003.