Macquarie Group tumbled in Sydney and HSBC Holdings dropped in Hong Kong after Lehman Brothers Holdings reported a $2.8 billion loss and Federal Reserve Chairman Ben S Bernanke said policy makers will "strongly resist'' inflation.
Industrial & Commercial Bank of China fell after the nation's central bank ordered lenders to set aside record reserves. Orient Overseas International led transport companies lower on concern rising oil prices will dent profits.
The MSCI Asia Pacific Index lost 2.4 per cent to 143.76 at 7:39 pm in Tokyo, its biggest drop since March 17 and the lowest level since April 15. About six stocks fell for each that rose. All 10 industry groups slumped, with financial stocks leading the declines.
China's benchmark CSI 300 Index tumbled 8.1 per cent, with more than half of the measure's 300 members dropping by the 10 per cent daily limit. Japan's Nikkei 225 Stock Average retreated 1.1 per cent to 14,023.17.
Australia's S&P/ASX 200 Index lost 2.8 per cent, its biggest decline since March 20. Hong Kong's Hang Seng Index fell 4.2 per cent. In the US, Standard & Poor's 500 Index futures were down 0.9 per cent recently.
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Europe
European stocks declined for a fourth day as investors speculated bank losses will increase and near-record oil prices will curb economic and profit growth.
The Stoxx 600 lost 0.5 per cent to 308.71, the lowest since April. The index has slumped 23 per cent from a six-year high a year ago on concern credit-related losses approaching $400 billion, rising oil prices and higher inflation will erode earnings.
National indexes retreated in 15 of the 18 western European markets. France's CAC 40 added 0.1 per cent and Germany's DAX increased 0.2 per cent.
The UK's FTSE 100 slipped 0.5 per cent after a government report on Tuesday showed UK producer prices increased at the quickest pace in two decades in May, supporting the Bank of England's case to resist lowering borrowing costs.
US
Most US stocks fell, led by banks and technology companies, after speculation the Federal Reserve will raise interest rates overshadowed improving sales at McDonald's and a rally in energy producers.
About eight stocks decreased for every five that gained. The Nasdaq Composite Index lost 15.1 points, or 0.6 per cent, to 2,459.46. The S&P 500 added 1.08, or 0.1 per cent, to 1,361.76. The Dow average climbed 70.51, or 0.6 per cent, to 12,280.32.