Japan’s Nikkei sagged 3 percent, en route for a weekly loss of 8.6 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.8 percent.
The index, which had hit a record high on Jan. 29, was on track for its sixth straight day of losses and stood to lose about 6 percent on the week. Australian shares lost 1.7 percent and South Korea’s KOSPI fell 2.3 percent.
“The correction phase in equities could last through February and possibly into March,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
“The rise in long-term U.S. yields will have to settle for the correction phase to end. The surge in volatility has also prompted investors to sell risk assets, in turn feeding more volatility.”
U.S. markets remained the epicentre of the global sell-off, with the Dow plunging 4.1 percent and the S&P 500 sinking 3.7 percent overnight.
With Thursday’s losses, both the S&P 500 and the Dow slid into correction territory, falling more than 10 percent from Jan. 26 record highs and showing that the dust was yet to settle from the sharp slide that began a week ago.
U.S. stocks began to wobble last Friday after a healthy U.S. labour market report sparked a spike in bond yields and fears of rising inflation which could trigger more central bank rate hikes.
Higher yields are seen hurting equities as they increase borrowing costs for companies and reduce their risk appetite. They also present a fresh alternative to investors, who may choose to allocate some of their money from equities to bonds.
The benchmark 10-year Treasury note yield rose as high as 2.884 percent on Thursday, just below Monday’s four-year high of 2.885 percent. It last stood at 2.8312 percent.
Treasury yields were pushed higher after the Bank of England said interest rates probably need to rise sooner, adding to expectations of reduced central bank stimulus globally.
In currencies, the dollar was down 0.15 percent at 108.590 yen, having lost 0.5 percent overnight. It was on track to lose 1.5 percent against its Japanese peer on the week.
The Swiss franc gained 0.1 percent to 0.9350 franc per dollar after advancing about 0.7 percent the previous day.
The euro added 0.1 percent to $1.2261.
The dollar index against a basket of six major currencies stood at 90.193 after touching a two-week high of 90.567 overnight.
The pound rose 0.1 percent to $1.3930. It had reached $1.4067 overnight following the hawkish BoE comments.
Commodity-linked currencies sagged as crude oil prices fell to seven-week lows.
The Canadian dollar traded at C$1.2590 per dollar after weakening to a six-week low of C$1.2615 the previous day. The Australian dollar fell to $0.7766, its lowest since Dec. 28.
U.S. crude futures were down 1.15 percent at $60.44 per barrel after hitting a seven-week trough of $60.27 on Thursday amid fears of rising global supplies after Iran announced plans to increase production and U.S. crude output hit record highs. – Reuters