Gold prices eased 0.3 percent at USD 1,093.20 an ounce, edging closer to last week's five-and-a-half-year low, as expectations for a rate hike in the US kept momentum firmly with the bears. Crude oil futures hit four-month lows; Brent crude settled down USD 1.15 at USD 53.47 a barrel, and US crude closed down 75 cents at USD 47.39.
Wall Street sank overnight, with the Nasdaq Composite shaving off 1 percent. The Dow Jones Industrial Average lost 0.7 percent to end at a five-month low, while the S&P 500 closed down 0.6 percent to chalk up a five-session losing streak for the first time since January.
Mainland markets in free fall
China's benchmark Shanghai Composite index opened down more than 4 percent, touching its lowest level in more than two weeks, before swiftly narrowing losses to 1.8 percent.
Equities in the world's second-largest economy posted their biggest one-day drop in eight years on Monday, as fresh data served up more concerns about growth. Data released on Monday showed industrial profits down 0.3 percent year-on-year in June, while Friday's preliminary China Caixin purchasing managers index (PMI) surprised markets by dropping to a 15-month low in July.
"Margin calls, and some stock trading halts, damage already brittle sentiment at a time when Chinese growth is under a cloud. Growth sentiment has not been helped by more 'earthy' Chinese indicators such as last Friday's Caixin PMI data and yesterday's industrial profits, continuing stalling industrial earnings since last August-September," analysts from National Australia Bank wrote in a note.
Concerns that Beijing may be reluctant to dole out further measures and the slump below the key psychological level of 4,000 points also contributed to the sell-off, analysts said.
"4,000 was a key level for a lot of people. Once it started falling below that, locking in gains or minimizing one's downside becomes a priority," Andrew Sullivan, managing director for sales trading at Haitong International Securities, told CNBC Asia's "Squawk Box."
Following the tumble, the China Securities Regulatory Commission said late Monday that the local government will increase purchases of stocks in an effort to support the equity market.
Among China's other indexes, the CSI300 index opened down 1.5 percent, while the smaller Shenzhen Composite erased 3.1 percent from the get-go.
In Hong Kong, the Hang Seng index slipped just 0.1 percent, hovering near a two-and-a-half-week low.
Nikkei skids 1.1 percent
Japan's Nikkei 225 hit a fresh two-week low on the back of negative global cues.
Counters with a heavy China exposure were among the biggest losers; Komatsu and Hitachi Construction Machinery slumped 2 percent each.
A stronger yen also dampened appetite for major exporters, with Nissan plunging 3.4 percent, while Sony and Panasonic retreated more than 2 percent each.
Suntory Beverage & Food dropped 0.6 percent after denying a report by the Nikkei business daily that its parent Suntory Holdings is considering an initial public offering of its own.
Defying the downtrend, Canon bounced up nearly 1 percent after the company's second-quarter net profit beat market expectations, despite a 16 percent fall year-on-year. The world's largest camera maker said on Monday its second-quarter net profit fell to 68 billion yen ($552 million) compared with 81 billion yen a year earlier. Analysts polled by Reuters had expected 65 billion yen.
ASX falls 0.7 percent
Australia's S&P ASX 200 index reversed Monday's gains as worries over cooling growth on the mainland - Australia's biggest export market - take a toll on trading sentiment.
Commodity plays nosedived in early trade; BHP Billiton tanked 1.5 percent, while Newcrest Mining plunged 4.8 percent. Woodside Petroleum and Santos notched down 0.5 and 2 percent, respectively, as energy prices languished at multi-month lows.
A lower open among financials provided further downside for the bourse; Westpac receded 0.9 percent, while Australia and New Zealand Banking and Commonwealth Bank of Australia eased 0.4 percent each.
The Australian dollar hovered near its lowest levels since May 2009 against the greenback. The local currency last traded at $0.7282.
Kospi drops 0.9 percent
South Korea's Kospi index sagged to a two-and-a-half-week low as the country's Prime Minister declared the deadly outbreak of Middle East Respiratory Syndrome (MERS) over, Yonhap news agency reported.
Decliners were led by pharmaceuticals, energy producers and airlines; Hyundai Pharmaceutical skidded 7 percent, while Korean Air Lines and Asiana Airlines slumped 2.1 and 3.4 percent, respectively.
Fortunately, a rebound in market heavyweights provided some support; the heaviest-weighted stock Samsung Electronics bounced up 0.7 percent, while Hyundai Motor and Kia Motors rebounded more than 1 percent each.