Asian stocks succumbed to the global retreat, halting a two-day rally as oil fell back below $30 a barrel and anxiety among investors increased ahead of Japanese and U.S. central bank meetings.
New Zealand shares followed Asian markets lower with the S&P/NZX 50 Index dropping 33.08 points, or 0.5 percent, to 6142.16.
Chinese and Japanese shares drove losses in the region with markets in Australia and India shut for holidays and U.S. index futures declined. American oil extended last session's selloff, falling to $29.47 amid expectations U.S. stockpiles data will intensify concerns over the global glut.
The share rout and energy losses bolstered haven investments, with the yen rising a second day and Treasuries holding gains.
"Investors tend to see the decline of oil as a direct indication of slower global growth and weakness in emerging- market economies," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities in Tokyo.
"This is making the overall atmosphere worse."
After the European Central Bank sparked a brief rally in risk assets by raising the prospect of more stimulus, investors are increasingly focused on meetings of the Federal Reserve and Bank of Japan this week. People familiar with discussions in Tokyo say it's a close call whether officials there will vote to accelerate easing.
The impact of crude's selloff on inflation and earnings is worrying traders, with shares and oil prices now the most correlated since 2013. CNOOC Ltd., which this month said it plans to cut output for the first time in a decade, plunged 6.6 percent to lead losses in Hong Kong equities.
The MSCI Asia Pacific Index declined 1.2 percent during the afternoon clawing away at some of the gauge's 5 percent surge over the past two days.
Japan's Topix index lost 2.3 percent, led by Toyota Motor Corp., while the Kospi index in Seoul retreated 1.2 percent. The Philippine benchmark lost 1.3 percent and Taiwanese shares fell 0.8 percent.
Hong Kong's Hang Seng Index declined 1.9 percent, while the Hang Seng China Enterprises Index, a gauge of mainland Chinese stocks listed in the city, slipped 2.9 percent. The Shanghai Composite Index dropped 3.2 percent, led by PetroChina Co.
Huang Weimin, whose Chinese stock-index futures wagers returned more than 6200 percent last year, says the Shanghai gauge could drop another 15 percent in the first half as slowing economic growth and a weaker yuan fuel an exit of capital. Outflows reached a record $1 trillion in 2015, more than seven times higher than the whole of 2014 based on Bloomberg Intelligence data dating back to 2006.
"The pressure for capital outflow and yuan's devaluation is still quite big," said Dai Ming, a fund manager at Hengsheng Asset Management Co. in Shanghai, adding that he's cutting equity holdings.
"We haven't seen signs of a pick-up in the economy and the first and second quarters could be challenging."
In the futures market, e-mini contracts due in March on the S&P 500 declined 0.3 percent. Energy and mining shares also led U.S. losses last session.
West Texas Intermediate crude slid 2.9 percent, extending Monday's 5.8 percent retreat.
Futures jumped 9 percent on Friday amid speculation the tumble that has brought oil prices down another 19 percent this year had gone too far. Government data due out Wednesday is expected to show U.S. inventories rose by 4 million barrels last week, according to energy analysts. That would be a third week of gains.
Saudi Arabian Oil Co. is maintaining investment in oil and natural gas projects as it studies restructuring options, Chairman Khalid Al-Falih said Monday. The state-run producer can survive low oil prices for "a long, long time," he told reporters in Riyadh.
Gold for immediate delivery gained 0.4 percent to $1,112.66 an ounce, after rising 0.9 percent last session. It climbed 0.8 percent last week as the turmoil in global stock markets renewed interest in the metal as a store of value.
The won fell for the first time in four days, weakening 0.8 percent to 1203.99 per dollar as the Indonesian rupiah lost 0.3 percent and the Thai baht 0.2 percent. South Korea reported economic growth of 3 percent for the fourth quarter on a year- on-year basis, retreating from a five-year high. A Bloomberg index of emerging-market currencies was down 0.2 percent today as the South African rand and the Turkish lira fell.
The yen climbed 0.3 percent to 117.97 per dollar, following a 0.4 percent climb on Monday. The euro was little changed at $1.0848, after gaining 0.5 percent in New York.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose 0.1 percent. While the Fed's Open Market Committee is set to review rates Jan. 27, traders aren't pricing in the probability of the next increase until September. Futures prices indicate U.S. rates will rise to 0.62 percent by the end of this year, which implies about one increase in 2016.
Yields on 10-year Treasuries fell one basis point to 1.99 percent. Rates fell by five basis points last session. Plunging energy costs have raised doubts about whether consumer-price growth is strong enough to sustain four interest-rate increases in 2016, the median projection from Fed officials at their December meeting. Government debt in Japan, Singapore and New Zealand was little changed.
China's central bank is flooding the country's financial system with cash to prevent a shortage as demand for funds picks up before the Lunar New Year holidays. The overnight repo rate, a gauge of funding availability in the interbank market, was little changed at 1.97 percent.