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Hong Kong - Asian markets tumbled in early trade on Monday and the yen climbed as eurozone fears returned on news that Cyprus was planning to tax bank depositors as part of a controversial bailout.
Wall Street also provided a weak lead, with the Dow seeing its first loss after a 10-day rally as data pointed to ongoing softness in the US economy.
Tokyo fell 2.10% by the break, Hong Kong lost 2.14%, Shanghai shed 0.62%, Sydney slipped 1.43% and Seoul was 0.49% lower.
Investors have been spooked by news Cyprus' government agreed to a levy of nearly 10% on Cypriots as part of a deal with fellow eurozone countries and international creditors in order to qualify for a $13bn bailout.
Deposits of more than €100 000 will be hit with a 9.9% charge and 6.75% for anything below that threshold.
The proposal must still be passed by parliament.
President Nicos Anastasiades said in a televised address Sunday the tax was the "least painful" option for the recession-hit island and vowed to try to persuade the eurogroup to "limit the impact on small depositors".
While bank customers have voiced dismay and anger at the plan, global markets were jolted amid fears it could reignite the eurozone debt crisis and hit confidence in other troubled countries such as Spain and Italy.
"The feeling is that the euro crisis could be back and that you could see full on contagion, that's why you're seeing the market reaction today," said Shane Oliver, head of investment strategy and chief economist at Amp Capital in Sydney.
"But I suspect that we are going to hear reassurances from other countries that Cyprus is different and that this plan will not be put in place elsewhere," he told Dow Jones Newswires.
On currency markets the euro fell to $1.2902 and ¥122.20 in early Asian trade from $1.3075 and ¥124.61 in New York on Friday.
The dollar dropped to ¥94.70 from ¥95.26, although it received some measure of support from expectations that the new leaders of the Bank of Japan will unveil a fresh round of monetary easing to jumpstart the economy.
On Wall Street the Dow finished down 0.17%, the first time in nine days it did not set a fresh record, while the S&P 500 lost 0.16% after moving within a whisker of its own all-time high. The tech-heavy Nasdaq dropped 0.30%.
Dealers went into sell mode after the University of Michigan Consumer index took a surprising dive to 71.8, its lowest since the end of 2011 and down from 77.6 in February. Analysts had expected a gain.
Oil prices fell, with New York's main contract, light sweet crude for delivery in April dropping $1.24 to $92.21 a barrel and Brent North Sea crude for May delivery shedding $1.26 to $108.56.
Gold was at $1 597.00 an ounce at 03:00 GMT compared with $1 592.60 late on Friday.
