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Japan's Nikkei 225, which tumbled more than 3% at one point during the session, ended down 1.5%.

"The Western stock markets appear to be in a much worse condition than the Asia-Pacific region," said Andrew To, sales director at Taifook Securities in Hong Kong. "There should be some switch of funds from European and U.S. markets back to some emerging markets."

Stocks in Australia, India, Singapore and Taiwan narrowed their initial losses, with U.S. stock futures pointing higher.

Australia's S&P/ASX 200 lost 0.6% and Taiwan's Taiex ended down 1.1%. India's Sensex slipped 0.2% and Singapore's Straits Times closed 1% lower.

"My gut-feel is that a lot of people are punting on a bit of a bounce," said Ric Klusman, senior institutional trader at Aequs Securities. "And our (Australian) market seems to be absolutely sick of selling. They think there's some good value there."

Some other markets in the region lost heavily, though, with China's Shanghai Composite Index dropping by the biggest margin, 4.6%, as investors locked in profits after three days of gains in one of the world's best performing markets of 2009.

Hong Kong's Hang Seng Index dropped 2.9%, with China-related stocks tracking movements in Shanghai. South Korea's Kospi slumped 3.2%.

"We are now seeing some of the concerns (about the economy) turning into reality and we know there are unsolved issues ... that could delay a recovery for the global economy further. At this moment, risk aversion is very high across the global stock markets," said So Jang-ho at Samsung Securities in South Korea.

Taifook's Mr. To said anticipation that the Hong Kong government could announce personal tax concessions and stimulus measures for the property sector in an annual budget on Wednesday kept the market from falling further.

Still, some others expressed concern about deteriorating conditions in Hong Kong ahead of economic data also expected Wednesday.

"Investment data isn't going to look good either with private businesses reining in spending on machinery and equipment. I wouldn't be surprised to see a double-digit contraction in investment," said DBS economist Connie Tse.

Gross domestic product for the three months ended Dec. 31 is expected to have contracted 1.5% from the same period a year earlier, according to the median estimate of 12 economists surveyed by Dow Jones Newswires.

Property shares fell less than the broad market in Hong Kong on hopes of a government stimulus, with Cheung Kong (Holdings) down 2.1% and Henderson Land Development Co. falling 1.4%.

Shares of market heavyweight HSBC Holdings dropped 3% on persistent worries it may announce a large share sale as well as large write-downs related to bad investments when it reports its earnings next week.

In Tokyo, shares of Nomura Holdings plunged 9.3% after the brokerage Monday said it will issue 716.4 million shares in the domestic and overseas markets, on concerns the issue, which is estimated to help Nomura raise as much as $3.5 billion, could dilute its equity capital by as much as 39%.

Exporters gained modestly, however, as the U.S. dollar rose above the ?95 level, with Honda Motor Co. up 2.6% and Nintendo Co. surging 6%.

In Sydney, gold miners advanced on a strong outlook for the precious metal's prices, with Lihir Gold rising 1.2% and Newcrest Mining gaining 0.9%. Shares of Oil Search jumped 3.3% after it said profit more than doubled in 2008.

Technology shares were broadly weaker after the overnight tumble on Wall Street, with Samsung Electronics dropping 3.6% and Hynix Semiconductor losing 2.7% in Seoul, while Taiwan Semiconductor Manufacturing Co. declined 2.2% in Taipei.

In India, banking stocks dropped on worries that the uncertainty over the rescue plan for ailing U.S. lenders could further weaken the outlook for the Indian banking sector.

Thailand's SET Index fell 1.2%, Indonesia's main index gave up 1.4% and Malaysia's KLSE Composite was little changed, while Philippines' PSE Composite dropped 1.1%.

"The real issue is nobody [in Thailand] wants to buy at the moment and we're stuck in a dull trading range with no catalyst to push it either way," said Andrew Yates, a senior vice president at Royal Bank of Scotland. "Even if you want to commit, there is liquidity in only a handful of stocks, and where there is value in the second-liners there is no liquidity in them," he said.

New Zealand's NZX-50 Index broke below the 2500 mark, ending down 2.1% at 2483.74, its lowest level since March 2004.

In currency trading, the dollar recently bought ?95.40, up from ?94.50 late in New York, while the euro was higher at $1.2749 versus $1.2714, and ?121.77 compared with ?120.16.

April Nymex crude was at $38.14 a barrel, down 30 cents, extending its overnight fall in response to crumbling stocks and concerns over the economic outlook.

February gold futures were holding below the $1,000-a-troy-ounce mark passed Friday, down $8.20 at $986.40, with Sydney-based Sino Gold Mining Ltd.'s Chief Executive Jake Klein saying in an interview Tuesday that the gold price could rally to $1,500 an ounce as the global financial crisis boosts demand, even as output from producing countries like Australia and South Africa falls.

"Right at the moment, you would have to say that is on the cards," Mr. Klein said.