Japan's Nikkei share average and oil prices hit six-week lows on Wednesday as investors pulled funds out of bets on the global economy's recovery and favored safe havens, such as the U.S. dollar and government bonds.
European stock futures pointed to a drop of about half a percent in early trade.
Comments that a second U.S. stimulus package may be necessary coupled with heavy U.S. job losses have taken the wind out of a rally in global stocks and commodities, tempering some of the optimism about how quickly growth will return.
Talk of more stimulus spending is making investors nervous, said Kim Seong-joo, an analyst at Daewoo Securities in Seoul.
Market players were also taking profits and striking a cautious stance before a slew of quarterly corporate earnings announcements around the world, which will be scanned for comments on the demand outlook.
The MSCI index of Asia-Pacific shares outside Japan dropped 1.6 percent to hit a two-week low, with energy and financial shares falling the most. The MSCI index of world shares shed 0.6 percent to a seven-week low.
On Tuesday the U.S. S&P 500 fell 2 percent to hit a seven-week low.
But Asian stock indexes proved resilient, with South Korea's KOSPI holding near a nine-month intraday peak and the Shanghai Composite near a 13-month peak, as solid Chinese growth has helped limit the fallout in some parts of the region.
Highlighting the diverging performance between emerging Asian stock markets and global developed markets, the MSCI benchmark for Asia excluding Japan is still up 27 percent so far this year compared with a 3.4 precent rise in world stocks.
Japan's Nikkei was the hardest hit, falling 2.4 percent and down for a sixth straight trading day.
Shares of machinery makers such as Komatsu dropped after data showed private-sector orders posted a surprising fall in May to the lowest level since comparable records began in 1987.
But another report showed confidence among Japan's service sector workers jumped to a two-year high in June, boosted by subsidies on energy-efficient products and one-time government payments to households as part of efforts to support the economy.
Blackrock Japan, a unit of the world's biggest money manager, said on Wednesday that a further economic recovery could usher in more portfolio flows to Japanese equities as overseas client interest has picked up since March.
Foreign institutional investors were underweighting Japanese equities. The recovery will bring a very big inflow, Hiroyuki Arita, the firm's president and representative director, said at the Reuters Japan Investment Summit in Tokyo.
Foreign investors have been slower to return to Japan after a nine-month streak of dumping shares, preferring high-growth markets in Asia instead. Data on Wednesday showed foreign investors bought a net 261 billion yen ($2.8 billion) of Japanese shares in June, the third straight month of purchases.
The yen pushed higher as investors reversed positions in higher-yielding currencies, which tend to benefit from rising stocks and commodities. The low-yielding yen is often used as a cheap source of funds to buy higher-yielding currencies in carry trades.
The dollar slid 0.7 percent to 94.10 yen and touched a five-week low. The euro shed 1 percent to 130.50 yen and struck a six-week low.
The dollar index, a gauge of its performance against six major currencies, was steady and buoyed by investors shedding emerging market and other currencies for the U.S. unit.
Government bonds extended their rally.
The benchmark 10-year Japanese yield fell 2 basis points to 1.285 percent, a 3-1/2-month low and down 27.5 basis points in the past month as Japanese banks have shoveled funds into safe-haven debt.
U.S. Treasuries also climbed in Asia, with the 10-year yield down 3 basis points at 3.433 percent having touched a six-week low of 3.428 percent. That yield has dropped nearly 60 basis points in the past moth, flattening the yield curve.
U.S. crude prices were down 86 cents a barrel at $62.07 and have shed more than $11 in a little more than a week. Gold was little changed at $922.70 an ounce.
(Additional reporting by Rhee So-eui in Seoul; Chikafumi Hodo and Kevin Plumberg in Tokyo; Editing by Neil Fullick)