Asian stocks slid more than 2 per cent today led by financial shares after broker downgrades of US banking giant Citigroup sparked worries about further fallouts from credit market problems.
Those concerns dampened appetite for riskier assets, boosting safe-haven Japanese government bonds and were seen weighing on European stocks, where financial bookmakers are expecting falls of close to 1 percent for the three major European stock indexes.
Caution ahead of the influential US employment report due later in the day kept the low-yielding yen from making further substantial headway and helped oil and gold steady from overnight falls.
Tokyo's Nikkei average ended 2.1 per cent lower, while MSCI's measure of other Asia Pacific stocks shed 2.4 per cent by 6.07am.
Just a day earlier, the MSCI index touched an all-time high before ending a shade lower after the boost from a widely expected US interest rate cut faded. The index is up nearly 45 per cent so far this year.
Bad news for stock investors came in the form of a ratings downgrade, where CIBC World Markets cited concerns Citi might have to cut its dividend or sell assets to boost capital, amid fears the bank could face further losses from subprime mortgage-related securities.
The news, which drove Citi's shares down nearly 7 per cent, coupled with disappointing earnings from Exxon Mobil, sent Wall Street's three main indexes down more than 2 per cent.
Data showing a slowdown in factory growth in October that suggested the US economy was cooling from its surprisingly robust third-quarter pace also weighed on sentiment.