Japan's benchmark Nikkei index ended Tuesday's trade down 2.31 per cent, after earlier losing more than 3 per cent.

Falling commodity prices added to the region-wide pessimism, which hit every Asian market.

Hong Kong's Hang Seng index was down 2.6 per cent in afternoon trade and Australia's S&P/ASX 200 also closed down 3.14 per cent.

Benchmarks in South Korea, Taiwan, Singapore and mainland China also retreated.

Most of Asia's biggest economies are heavily dependent on exports, but demand has plummeted as a result of the downturn, particularly in key markets such as the US.

Indian shares also fell more than 3 per cent on Tuesday, rattled by concerns of the deepening global economic crisis would trigger more foreign fund outflows.

The State Bank of India dropped 3.3 per cent to 1,109.50 rupees, and the Housing Development Finance Corporation, a mortgage lender lost 4.4 per cent to 1,478.50 rupees.