HONG KONG (AFP) - Asian markets tumbled in early trade on Monday and the yen climbed as eurozone fears returned on news that Cyprus was planning to tax bank depositors as part of a controversial bailout.

Wall Street also provided a weak lead, with the Dow seeing its first loss after a 10-day rally as data pointed to ongoing softness in the US economy.

Tokyo fell 2.10 per cent by the break, Hong Kong lost 2.14 per cent, Shanghai shed 0.62 per cent, Sydney slipped 1.43 per cent and Seoul was 0.49 per cent lower.

Investors have been spooked by news Cyprus' government agreed to a levy of nearly 10 per cent on Cypriots as part of a deal with fellow eurozone countries and international creditors in order to qualify for a US$13 billion (S$16.26 billion) bailout.

Deposits of more than 100,000 euros will be hit with a 9.9 per cent charge and 6.75 per cent for anything below that threshold.

The proposal must still be passed by parliament.

President Nicos Anastasiades said in a televised address Sunday the tax was the "least painful" option for the recession-hit island and vowed to try to persuade the eurogroup to "limit the impact on small depositors".

While bank customers have voiced dismay and anger at the plan, global markets were jolted amid fears it could reignite the eurozone debt crisis and hit confidence in other troubled countries such as Spain and Italy.

"The feeling is that the euro crisis could be back and that you could see full on contagion, that's why you're seeing the market reaction today," said Shane Oliver, head of investment strategy and chief economist at Amp Capital in Sydney.

"But I suspect that we are going to hear reassurances from other countries that Cyprus is different and that this plan will not be put in place elsewhere," he told Dow Jones Newswires.