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Japan's benchmark Nikkei 225 stock index closed down 3.35% at its lowest level in 26 months, while Hong Kong's Hang Seng was trading down almost 4%.
On Tuesday, gloomy results from Citigroup and weak Christmas US retail sales increased fears of a US slowdown.
This hit shares in the US and Europe, with London's FTSE 100 index down 3%.
Tokyo's Nikkei index ended Wednesday down 468.12 points, or 3.35%, at 13,504.51.
Mortgage debt worries
One of the main drivers of the sell-off was results from Citigroup showing it made a net loss of almost $10bn for the last three months of 2007 as a result of write downs from bad mortgage-related investments.
The bank, one of the biggest in the world in terms of assets, said the loss had been caused by an $18.1bn exposure to bad mortgage debt.
This reinforced the extent of the housing crisis in the US, while spurring worries that other banks were still harbouring undisclosed losses.
"The fallout from the Citigroup result is significant, with many saying ... there is more bad news to come," said Trent Muller, an ABN Amro Morgan analyst in Sydney.
"We will see a bit of panic selling with a lot of investors taking cash off the table today."
(BBC)
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