Asian shares fell on Monday as risk sentiment was dented by lacklustre earnings from leading U.S. companies, and a bigger than expected fall in exports from Japan, a key driver of the world's third-biggest economy.
U.S. stocks ended on Friday with their worst day since late June, following disappointing results from Dow components General Electric
Of the 116 Standard & Poor's 500 companies that have so far reported in the U.S. earnings season, 60 percent have exceeded analysts' estimates, below the 67 percent pace of the previous four quarters, according to Thomson Reuters data.
The MSCI index of Asia-Pacific shares outside Japan fell 0.6 percent, with Australian shares down 1 percent on worries about metals demand in China, Europe's debt woes and weak U.S. corporate earnings. South Korean shares opened down 1.7 percent.
Japan's Nikkei average opened down 1.4 percent.
"Today's market is going to drop because the U.S. markets' sharp decline will be the catalyst for profit-taking," said Takashi Hiroki, chief strategist at Monex Inc.
"We are left with a market taking in some negative earnings news in the most bought sector, namely IT," said Societe Generale in a research note. "Taiwan had already taken a tumble on Friday and it will be the one to watch in the Asian session in what should be the follow though of a tactical correction, many will be waiting to buy into."
The dollar was down 0.1 percent at 79.24 yen, capped at its 200-day moving average around 79.40 after reaching a two-month high of 79.47 on Thursday.
U.S. crude fell 0.6 percent to $89.52 a barrel and Brent also fell 0.6 percent to $109.51.
A Reuters poll on Monday showed sentiment among Japanese manufacturers has tumbled, at the sharpest pace since last year's earthquake, to its lowest level since 2010. A dispute with China, Japan's biggest trading partner, added to mounting concerns over the economic slowdown there.
Japan's exports fell a bigger-than-expected 10.3 percent in September from a year earlier, data showed on Monday, with exports to China, the top destination for Japanese shipments, slumping 14.1 percent in the year to September. Exports to Europe fell 21.1 percent.
While global growth worries have raised concerns about weak demand from China, a Reuters poll showed that the world's second-largest economy could stage a tepid economic rebound in the fourth quarter on higher public infrastructure spending, but growth will remain lethargic through 2013.
Reflecting investor risk wariness, the CBOE Volatility index, a gauge of expected volatility in the S&P, jumped 13.5 percent to close at 17.06 on Friday. It hit a five-month high earlier on Friday.
Investors shunned stock funds for the third straight week and bet more on high-yield junk bonds amid year-end uncertainty, data from EPFR Global showed on Friday.
Hedge funds and other big speculators have cut their bullish bets on U.S. commodities to the lowest levels since the end of August.
MIXED SIGNALS IN EUROPE
The euro was resilient despite mixed signals from the euro zone over the progress of its three-year debt crisis, trading up 0.1 percent at $1.3021.
European shares snapped a four-day winning streak on Friday after disagreements from European Union leaders over how to help the region's debt-ridden banks hit financial stocks.
German Chancellor Angela Merkel raised new hurdles on Friday to using the euro zone's rescue fund to inject capital directly into ailing banks from next year, limiting the impact of a key agreement by European Union leaders on Thursday to establish a single banking supervisor from 2013.
Merkel's move dashed hopes for Spain, saddled with huge public debts and a fragile banking system, to soon remove the cost from its strained national debt.
Spain hasn't also made clear its stance on an European assistance and euro zone officials pointed to a November 12 finance ministers' meeting as the next potential date for decisions on Spanish aid and further assistance for Greece, which is struggling to implement a second bailout programme.
Spanish Prime Minister Mariano Rajoy secured backing for his austerity drive in a vote in his home region of Galicia on Sunday.
Reflecting improving investor confidence, government bond yields for highly-indebted Italy and Spain tumbled sharply on Friday after successful debt sales in both countries.
Ten-year Spanish bonds yields fell to its lowest since early April of 5.297 percent on Friday, while Italian 10-year yields hit their lowest in more than seven months of 4.71 percent.
