Japan's benchmark Nikkei has fallen by 5.52% in morning trading, and at one point was 7.59% down on the day.
South Korea's stock price index tumbled nearly 8% while markets in New Zealand, Hong Kong and Australia also declined.
The falls came as new figures showed Japan's trade surplus plunged 94% in the last year due to weak exports and soaring energy import costs.
Meanwhile, the White House has said a global summit to tackle the financial crisis will be held next month.
The meeting will debate the reforms needed to avoid another financial crisis and look at the progress currently being made.
Leaders from the G20 group of nations - the world's leading industrialised countries and major developing nations - will attend.
'Risk factor'
In Tokyo, the Nikkei fell sharply as soon as the markets opened, and at one point was trading at 8,016.61, its lowest level for more than five years.
Japan's benchmark index has now lost 30% of its value in the space of a month.
The plunge came in the wake of Wednesday's trading on Wall Street, which lost 5.69%, amid an increasingly gloomy outlook for the global economy.
Analysts say Japanese investors are also showing concern about the strengthening yen, fearing it will cause further damage to the already badly squeezed export industry.
"Rapid fluctuations in the stock and currency markets are risk factors to the economy," said Jun Matsumoto, a deputy chief cabinet secretary, at a Tokyo press conference.
In Seoul, the Korean won lost 5% of its value against the dollar.
'Rapid deterioration'
Job cuts at Yahoo and drugs firm Merck have increased economic concerns in the United States.
Investor sentiment was also hit by warnings from both UK Prime Minister Gordon Brown and Bank of England Governor Mervyn King that Britain was most likely now entering its first recession in 16 years.
Stocks were also dragged down by commodity stocks tracking weaker oil and copper prices.
Crude prices were down to 16-month lows on signs of falling demand. US light crude was down $5.52 to $66.66, its lowest point since June 2007.
Brent was down $5.02 to $64.70. Opec is now expected to cut production when it meets on Friday to try to shore up prices.
Widespread sell-off
Wall Street's main Dow Jones index ended down 5.7% or 514 points to 8,519 on Wednesday, while in Europe, the UK's FTSE 100 lost 4.5%, and Germany's Dax fell 4.5%.
"It appears that investors are rethinking their assumptions about the depth and duration of the recession," said Fred Dickson, chief market strategist at DA Davidson.
"They are recognising that the credit crisis has taken an annoying economic slowdown into something far more serious."
Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said attention had turned from a banking crisis - which was now considered to have been largely averted - to the possibility of recession.
"The question is, how long and deep will it be?"
He said UK GDP figures, due to be released on Friday, were likely to be in negative territory and the market was "steeling itself".
BBC
South Korea's stock price index tumbled nearly 8% while markets in New Zealand, Hong Kong and Australia also declined.
The falls came as new figures showed Japan's trade surplus plunged 94% in the last year due to weak exports and soaring energy import costs.
Meanwhile, the White House has said a global summit to tackle the financial crisis will be held next month.
The meeting will debate the reforms needed to avoid another financial crisis and look at the progress currently being made.
Leaders from the G20 group of nations - the world's leading industrialised countries and major developing nations - will attend.
'Risk factor'
In Tokyo, the Nikkei fell sharply as soon as the markets opened, and at one point was trading at 8,016.61, its lowest level for more than five years.
Japan's benchmark index has now lost 30% of its value in the space of a month.
The plunge came in the wake of Wednesday's trading on Wall Street, which lost 5.69%, amid an increasingly gloomy outlook for the global economy.
Analysts say Japanese investors are also showing concern about the strengthening yen, fearing it will cause further damage to the already badly squeezed export industry.
"Rapid fluctuations in the stock and currency markets are risk factors to the economy," said Jun Matsumoto, a deputy chief cabinet secretary, at a Tokyo press conference.
In Seoul, the Korean won lost 5% of its value against the dollar.
'Rapid deterioration'
Job cuts at Yahoo and drugs firm Merck have increased economic concerns in the United States.
Investor sentiment was also hit by warnings from both UK Prime Minister Gordon Brown and Bank of England Governor Mervyn King that Britain was most likely now entering its first recession in 16 years.
Stocks were also dragged down by commodity stocks tracking weaker oil and copper prices.
Crude prices were down to 16-month lows on signs of falling demand. US light crude was down $5.52 to $66.66, its lowest point since June 2007.
Brent was down $5.02 to $64.70. Opec is now expected to cut production when it meets on Friday to try to shore up prices.
Widespread sell-off
Wall Street's main Dow Jones index ended down 5.7% or 514 points to 8,519 on Wednesday, while in Europe, the UK's FTSE 100 lost 4.5%, and Germany's Dax fell 4.5%.
"It appears that investors are rethinking their assumptions about the depth and duration of the recession," said Fred Dickson, chief market strategist at DA Davidson.
"They are recognising that the credit crisis has taken an annoying economic slowdown into something far more serious."
Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said attention had turned from a banking crisis - which was now considered to have been largely averted - to the possibility of recession.
"The question is, how long and deep will it be?"
He said UK GDP figures, due to be released on Friday, were likely to be in negative territory and the market was "steeling itself".
BBC
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