Tokyo's Nikkei led an Asian share slump Tuesday following painful losses in New York and Europe, with fears sparked by the global slump in oil prices and the Greek political crisis.
The euro sat near nine-year lows as the uncertainty in Greece raised the prospect it could leave the eurozone.
Investor fears intensified after oil prices fell below the psychological $50 a barrel mark owing to a global supply glut, weak demand and a stronger dollar.
Tokyo plunged 3.02 percent, or 525.52 points, to 16,883.19, Seoul lost 1.74 percent, or 33.30 points, to close at 1,882.45 and Sydney fell 1.57 percent, or 85.53 points, to 5,364.8.
Hong Kong fell 0.99 percent, or 235.91 points, to 23,485.41 but Shanghai was flat, recovering early losses to edge up 0.93 points to 3,351.45 -- a five-and-a-half-year high.
The first full week of the new year got off to a traumatic start for dealers as they bet that a January 25 general election in Greece would see a victory for the left-wing Syriza party.
Markets fear the party will roll back austerity measures required under the IMF-EU bailout of the country, which could in turn lead it to exit the eurozone.
The year is "barely three trading days old and already the two biggest themes that were predicted to affect the markets this year are making headlines: oversupply of commodities and the eurozone," Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an email to clients, according to Bloomberg News.
At the weekend Der Spiegel quoted German government sources as saying they consider Greece's exit "almost inevitable" if Syriza wins the snap poll.
Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble had come to consider Athens' removal from the bloc would be "manageable", the magazine said.
However, investors were spooked and on Monday Greek stocks sank more than five percent, while the Paris, Madrid and Milan exchanges fell more than three percent.
- Oil below $50 a barrel -
The Dow dived 1.86 percent Monday, the S&P 500 fell 1.83 percent and the Nasdaq lost 1.57 percent.
In currency trade the euro sank to $1.1864 Monday, its lowest level since March 2006. On Tuesday the single currency had slightly recovered, buying $1.1935.
The euro was meanwhile at 142.23 yen against 142.74 yen in US trade and well down from the 144.58 yen Friday.
Adding to downward pressure is increased speculation that the European Central Bank would buy eurozone government bonds to counter deflation risks.
The dollar was at 119.15 yen Tuesday, compared with 119.61 in New York Monday and also well down from 120.46 yen Friday.
A morning pick-up in oil prices could not be sustained after slipping below $50 for the first time in more than five years in New York.
US benchmark West Texas Intermediate for February delivery rose back above the psychological level in Asia but gave up those gains and extended its losses as the day wore on.
The contract was down 54 cents at $49.50, while Brent crude for February fell 59 cents to $52.52.
The cost of crude has plunged since June as supplies outstrip demand with key consumer China slowing down, the eurozone struggling and the dollar, in which it is priced, strengthening.
A decision late last year by the Organization of the Petroleum Exporting Countries (OPEC) to maintain output despite the glut has also cut into prices.
"The fundamentals of oil are unlikely to change in the first half of this year, which will see oil bedding down into its bear market for months to come," IG's Lucas said.
Gold was at $1,208.03 an ounce, compared with $1,196.40 on Monday.
In other markets:
-- Taipei fell 2.43 percent, or 225.77 points, to 9,048.34.
Taiwan Semiconductor Manufacturing Co shed 4.30 percent to Tw$133.5, while Hon Hai Precision Industry lost 3.10 percent to end at Tw$84.5.
-- Wellington gave up 0.74 percent, or 41.22 points, to 5,561.38.
Telecoms firm Chorus fell 0.19 percent to NZ$2.64 and ANZ bank lost 1.62 percent to NZ$33.40.
-- Manila was flat, notching up 1.11 points to 7,277.74.
Philippine Long Distance Telephone fell 2.23 percent to 2,810 pesos, Energy Development gained 1.76 percent to 8.65 pesos, while Megaworld rose 3.95 percent to five pesos.