Japan's Nikkei 225 index sank 1.3 per cent to 8,922.32, wiping out gains of the previous day. The country's strengthening currency clobbered Japan's behemoth export sector.
Honda Motor Corp lost 3 per cent, while Nissan Motor Corp stumbled 3.5 per cent. Toyota, Mazda and Sukuzi Motor Corps each fell more than 1 per cent.
Consumer electronics giants also slid, Sony Corp, by 2.4 per cent; Panasonic Corp, by 2.2 per cent.
Hong Kong's Hang Seng index stumbled 1 per cent to 19,489.03, but South Korea's Kospi index reversed earlier losses and rose 0.8 per cent to 1,820.47.
On Wall Street yesterday, the Dow Jones industrial average closed down 519 points, with selling largely spurred by worries about Europe. American bank stocks took hits because investors fretted that debt problems overseas might reach the United States.
France came under pressure amid concerns that it could follow the US and become the next country to lose its top AAA rating.
Standard & Poor's rating agency stripped the US of its AAA credit rating late last week, sending global stocks into a tailspin.
The downgrade of US debt is fueling worries that France could be next to lose the rare top rating if it contributes to further bailouts of eurozone countries.