Investors also reacted nervously to U.S. Treasury Secretary Henry Paulson's announcement that the government's $700 billion financial rescue package won't purchase troubled assets from banks as originally planned. The Treasury will instead rely on buying stakes in banks and encouraging them to resume more normal lending.
Japan's benchmark Nikkei 225 stock average fell 480.92 points, or 5.5 percent, to 8,214.59 and Hong Kong's Hang Seng index dived 6.6 percent to 13,015.28 points.
Markets in Australia, South Korea and Taiwan all fell more than 4 percent.
"The negative corporate and economic news flowing out of the U.S. is what markets have been expecting and it doesn't change the picture investors have, which was already bad," said Porranee Tongyen, head of research at Asia Plus Securities in Bangkok.
In Asia, only the Shanghai Composite Index traded in positive territory, up 1.7 percent as the Chinese government's $586 billion economic stimulus package announced Sunday continued to underpin sentiment.
Grim news from companies weighed on U.S. stocks overnight with the Dow Jones industrial average falling 4.7 percent to 8,282.66, its third straight loss. Department store chain Macy's Inc. said it lost $44 million in the third quarter as sales fell more than 7 percent, and consumer electronics retailer Best Buy Co. slashed its fiscal 2009 guidance on fears that consumer spending will erode even further.
That's bad news for Asia's exporters, which depend on American consumers to buy their products.
Japanese exporters were also hit by a strengthening yen, which erodes the value of their overseas earnings when converted back to the local currency. The yen was trading at 95.58 to the dollar in Asia, versus 97.98 yen a day earlier.
Sony Corp. slid 8.2 percent to 2010 yen. Another electronics maker, Sharp Corp., fell sharply on news it agreed to pay $120 million after pleading guilty to conspiring with two other companies to fix prices of LCD screens in the U.S. Its shares were down 6.2 percent to 683 yen.
South Korea's main index slid 6.5 percent to 1,051.38 as bellwether Samsung Electronics Co. sank 4.3 percent.
Oil prices continued their decline after the U.S. Energy Department said Wednesday it expects U.S. consumption of petroleum to next year drop more severely than any time since 1980.
Light, sweet crude for December delivery was down 81 cents to $55.35 a barrel, after falling as low as $55.03, in electronic trading on the New York Mercantile Exchange by midmorning in Singapore.
