Japan's Nikkei 225 stock average tumbled 422.89 points, or 4.8 per cent, to 8,413.91, catching up with Asia's losses on Monday after being closed for a holiday but also undermined by strength in the yen.

Hong Kong's Hang Seng index slid 2.2 percent to 13,668.05, Australia's index slipped 0.8 per cent and Shanghai's market traded 2 per cent lower amid news that China's trade slump worsened in December as exports fell at their fastest rate in a decade. South Korea bucked the trend with the Kospi up 1 per cent to 1,167.71.

'The overall mood is still cautious. There is no rush to buy stocks,' said Mr Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong, who expects the Hang Seng index to fall to as low as 13,000 this month. 'The outlook for the market is not good.'

As Europe's markets opened, Britain's FTSE 100 fell 1.6 per cent, Germany's DAX was off 1 per cent and France's CAC-40 slipped 1.3 per cent.

On Wall Street, stocks fell on Monday as investors braced for the latest US earnings season amid fears the financial crisis and the recession are hurting corporate profits more than previously expected.

The Dow Jones industrial average fell 125.21 points, or 1.5 per cent, to end at 8,473.97. Broader stock indicators also declined, with the Standard & Poor's 500 index shedding 20.09, or 2.3 per cent, to 870.26. Futures pointed to a weaker open on Wall Street with Dow futures down 47 points, or 0.6 per cent, to 8,397 and S&P 500 futures off 2 points, or 0.2 per cent, at 866.10.

In Tokyo, Sony Corp. dived 8.6 per cent after media reports said the company will post a 100 billion yen (S$1.64 billion) operating loss this fiscal year through March, its first since 1995. The company declined to comment.

Profits at the electronics exporter have been hurt by a stronger yen, which erodes overseas earnings, and waning demand as the global economic slump unfolds.

The dollar slipped to 88.87 yen on Tuesday from 89.44 yen. A year ago the dollar was buying about 108 yen.

'The market was hit by multiple negative factors at once,' said Mr Kazuki Miyazawa, market analyst at Daiwa Securities SMBC in Tokyo, citing US stock losses overnight, the weaker dollar and selloffs targeting companies with bleak earnings outlooks.

'Stock prices regained some ground in the first few days of this month but buying ... has lost steam,' Mr Miyazawa said.

Japan's automakers, already forecasting sharply lower earnings as demand for new cars evaporates, continued to slide. Top automaker Toyota Motor Corp. sank 6.4 per cent and Honda Motor Co. dropped 6.8 per cent.

Lower oil and metals prices hit energy and commodity stocks around the region. Japanese energy exporter Inpex Corp. tumbled 7.9 per cent while in Australia, BHP Billiton, the world's biggest mining company, fell 1.3 per cent. In Singapore, commodities company Noble Group shed 4.5 per cent.

Light, sweet crude for February delivery was down $1.08 at $36.51 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange on expectations crude demand will weaken amid a severe global economic slowdown.

Crude prices have fallen more than 25 per cent since reaching just above $50 a barrel last week.

TOKYO
Japan's Nikkei stock index slumped 4.79 per cent by the close on Tuesday, hit by fresh losses on Wall Street and worries about weak corporate earnings.

The Nikkei dropped 422.89 points to 8,413.91.

Media reports that technology giant Sony is set to report its first annual operating loss in 14 years due to weak demand and a stronger yen added to the gloomy mood, dealers said.

HONG KONG
Hong Kong share prices closed 2.2 per cent lower on Tuesday, as poor performances by Wall Street and Tokyo hit investor confidence, dealers said.

The benchmark Hang Seng Index closed down 302.95 points at 13,668.05.

Turnover was 47.28 billion Hong Kong dollars (S$9.03 billion).

SHANGHAI
Chinese shares fell on Tuesday on unease about a bleak outlook for corporate profits and declines on Wall Street and elsewhere in Asia.

The benchmark Shanghai Composite Index dropped 2 per cent, or 36.98 points, to close at 1863.37. The Shenzhen Composite Index for China's smaller second market shed 2.9 per cent to 571.62.

Buying sentiment was dampened by Wall Street's 1.5 per cent decline overnight and falls in Tokyo and Hong Kong.

Analysts said the government's report on Tuesday that December exports fell 2.8 per cent from the previous year, worsening a trade slump, was expected and had little impact.

'Investors turned numb about the bad economic figures,' said Mr Xu Zhiyuan, an analyst for Capital Edge Investment & Management in Shanghai. 'Buying enthusiasm is still weak. Fluctuation has been the main feature of the market lately.'

KUALA LUMPUR
Malaysian shares closed 1.1 per cent lower on Tuesday as the bourse was hit by profit-taking in plantation, construction and banking stocks, dealers said.

The Kuala Lumpur Composite Index lost 9.87 points to close at 913.70, with decliners outnumbering advancing stocks 323 to 155.

'The decline on Wall Street overnight was the main trigger for today's selldown,' a dealer told Dow Jones Newswire.

'The market was looking a bit stretched after recent gains and this provided a good opportunity to lock-in some gains,' the dealer added.

Among advancing stocks, Naim rose 6.7 percent to 1.44 ringgit and Media Prima was 2.8 per cent stronger at 1.10 ringgit, while IOI Corp lost 5 per cent to 3.80 ringgit and KL Kepong was down 1.5 per cent at 9.85 ringgit. -- AFP, BERNAMA