Asia markets closed lower and the euro sank to a 10-month low against the US dollar as political turmoil in Italy left investors concerned over its implications in the eurozone.
Asian equities tumbled on Wednesday while the euro was stuck around 10-month lows as turmoil in Italy sparked a frantic dash for safety, while investors have also been spooked by fresh worries about the China-US trade row.
Global markets have been sent into a tailspin as a political crisis unfolding in Rome has thrust the stability of the eurozone and European Union back on to the agenda.
Stocks skidded as Italy heads for another round of elections that investors worry could become a referendum on whether to stay in the euro bloc.
Japan's Nikkei 225 stock index dropped 1.5 percent to 22,018.52. South Korea's Kospi dropped 2.0 percent to 2,407.95. The Hang Seng in Hong Kong slipped 1.5 percent to 30,034.07 and the Shanghai Composite index fell 1.6 percent to 3,072.76.
Australia's S&P ASX 200 fell 0.6 percent to 5,979.00. Shares fell in Southeast Asia and Taiwan.
Wall Street shudders
Prices for US government bonds surged as investors shifted money from stocks into lower-risk investments.
Bond yields dropped, and with them, interest rates on mortgages and other kinds of loans, hitting bank stocks on expectations lenders would earn thinner profits.
Italy bonds dumped
Investors dumped Italian government bonds, driving borrowing costs sharply higher for that country and rekindling fears of more financial strain for Europe's third-largest economy.
The political upheaval will likely lead to new elections, and investors are interpreting the new vote as a referendum and that Italy could move closer to abandoning the euro if populist parties win the election.
That could have major implications for the European financial system and its economy.
New jitters about the stability of the euro sent the currency's value against the dollar to its lowest level in almost a year.
The dollar fell to 108.53 yen from 109.77 yen.
The euro sank to $1.1533 from $1.1537.
Oil prices slump
US crude oil fell 25 cents to $66.50 per barrel in electronic trading on the New York Mercantile Exchange. It dropped 1.7 percent to $66.73 a barrel in New York.
Oil prices have slumped in the last week following reports that OPEC countries and Russia could start pumping more oil soon.
Brent crude used to price international oils, shed 38 cents to $75.11 a barrel in London.