Pedestrians are reflected on a share prices board in Tokyo Asian markets fell sharply and oil prices rose on Wednesday as the West stepped up preparations for a military strike on Syria, accused of a chemical attack on its own civilians. The losses extend a sell-off from Tuesday and follow drops on Wall Street and in Europe as investors run for cover, while emerging markets came under renewed pressure.
Adding to the geopolitical tensions in the Middle East are concerns about a looming row in Washington over the US debt ceiling, which has the potential to leave the country in political deadlock.
Tokyo slipped 2.32 percent by the break owing to a strengthening yen, with traders seeking safer assets, while Hong Kong shed 1.60 percent, Sydney eased 0.99 percent and Shanghai lost 0.57 percent. Seoul was 0.45 percent off.
The West, led by the United States, is edging closer to a targeted strike on Syria, which is accused of carrying out a gas attack on August 21 that killed hundreds of civilians.
\"We are prepared. We have moved assets in place to be able to fulfil and comply with whatever option the president wishes to take,\" US Defence Secretary Chuck Hagel told the BBC on Tuesday.
Supply fears fuelled by the possibility of more turmoil in the oil-rich region saw crude prices extend their gains. The benchmark New York contract, WTI crude for October delivery, jumped 71 cents to $109.72 a barrel, its highest since February 2012. Brent North Sea oil climbed $1.10 to a six-month high of $115.46.
Kathy Lien of BK Asset Management said: \"The possibility of a military strike on the country (Syria) is growing by the minute and investors are worried that it could destabilise the region.\"
On Wall Street, the Dow fell 1.14 percent, the S&P 500 lost 1.59 percent and the Nasdaq tumbled 2.16 percent.
In Europe, Paris and Frankfurt each lost more than two percent.
In forex trade, the dollar sat at 97.10 yen in Asia on Wednesday, up from 97.01 yen late in New York but well down from levels above 98.00 yen in Tokyo Tuesday.
The euro bought $1.3381 and 130.02 yen compared with $1.3391 and 129.88 yen.
Emerging markets in Asia - already under pressure because of the expected wind-down of the US Federal Reserve\'s stimulus programme - were also suffering Wednesday.
Jakarta fell 1.79 percent, Kuala Lumpur was off 1.46 percent, Manila dived 4.5 percent and Singapore dipped 1.02 percent.
\"The situation with Syria has been playing havoc with currency markets for the last few days,\" said Kenichi Hirano, market adviser at Tachibana Securities. \"Any action by the US is not likely to be protracted. But wrangling over the national debt could go on for quite a while, as we\'ve seen in the past.\"
Dealers are increasingly concerned about a repeat of the 2011 debt ceiling stand-off that brought Washington close to defaulting on its repayments and preceded a downgrade of its AAA sovereign rating.
Treasury Secretary Jacob Lew said this week the $16.7 trillion limit will be reached in mid-October, raising the chances that Republicans and Democrats will engage in another game of brinkmanship.
Gold cost $1,415.70 an ounce, near a three-month high, at 0210 GMT on Tuesday, up from $1,410.75 late Tuesday.