Japan's Nikkei slipped on Thursday as sliding US bond yields fed fears about a slowdown in the world's largest economy and a deepening downturn globally, putting a dent on cyclical stocks such as exporters. The Nikkei share average ended 1.6 percent lower at 21,033.76.
Benchmark 10-year Treasury yields fell to 15-month lows on Wednesday, keeping the yield curve inverted in a signal of a future US recession. The broader Topix dropped 1.7 percent to 1,582.85. Declining issues outnumbered advancing ones 1,878 to 229.
Also fuelling concerns about growth, New Zealand's central bank on Wednesday stunned markets with a sharp shift to a dovish stance, while the European Central Bank delayed a planned increase in rates in the face of rising global growth risks.
The economic gloom saw Germany sell 10-year debt with a negative yield for the first time since the autumn of 2016. "Investors are increasingly becoming risk-averse and shifting to safe-haven defensive shares from cyclical stocks," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.
But he said that when the index falls below its psychologically important 21,000-line, selling tends to ease.
Exporters were sold off, as the dollar slipped 0.4 percent to 110.09 yen.
Tokyo Electron slid 1.7 percent, Subaru Corp tumbled 3.3 percent and Daikin shed 1.5 percent.
Renesas Electronics Corp plunged 5.4 percent and Rohm Co stumbled 4.6 percent after German chipmaker Infineon cut its 2019 revenue forecast on Wednesday for the second time, which hurt US chip shares overnight.
The Philadelphia SE Semiconductor index dropped 1.5 percent. Shippers, which are sensitive to global demand, languished. Mitsui OSK Lines dropped 3.5 percent and Kawasaki Kisen fell 3.9 percent. Elsewhere, Gunma Bank dived 8.2 percent after it cut its net profit outlook for the year ending March to 23.1 billion yen from 28.5 billion yen.