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The Asian equities tracked Wall Street's slide on Wednesday, while investors switched to safe-haven government bonds, driven by fears that global growth will suffer as a potential trade deal between the United States (US) and China appeared to be unravelling.
Beijing said on Tuesday that Chinese Vice Premier Liu He will visit Washington on Thursday and Friday for trade talks, setting up a last-ditch bid to salvage a deal that would avoid a sharp increase in tariffs on Chinese goods ordered by US President Donald Trump.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.75 per cent, stooping to its lowest level since late March.
The Shanghai Composite Index retreated 1.6 per cent.
Australian stocks declined 0.6 per cent, South Korea's KOSPI fell 0.5 per cent and Japan's Nikkei was down 1.6 per cent.
Wall Street stocks had slid on Tuesday, with the S&P 500 losing 1.65 per cent and the Dow shedding 1.8 per cent on the US-China trade concerns.
Global stocks had a rocky start to the week after Washington on Monday accused Beijing of backtracking from commitments made during trade negotiations. That followed President Donald Trump's unexpected statement on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent.
“From an equity market perspective, the immediate focus is on the two-day talks scheduled to take place between the US and Chinese officials. However, it is difficult to imagine the two parties resolving their differences in just two days of talks. The markets may have to begin pricing in the trade conflict as a long-term factor once again,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
Government bond prices surged and their yields fell sharply as investor panic took a toll on growth asset markets.
Benchmark 10-year yields on US Treasuries, German bunds and Japanese government bonds (JGBs) sank to one-month lows.
Japan's 10-year yield burrowed deeper into negative territory and last stood at minus 0.060 per cent.
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