Japan's benchmark Nikkei, Asia's biggest by value, slumped by more than three per cent on Friday, following Wall Street's drop to a 12-year low.

Other major regional markets slid an average 1.4 per cent, with Sydney shedding 1.6 per cent to hit the lowest level since august 2003.

Malaysian shares were down slightly more than one per cent as news came that the country's exports had dropped 27.8 per cent in January from a year ago.

The country's trade ministry on Friday said it was biggest fall in 28 years, and worse than expected.

US job cuts

Asian investors are also waiting for a US employment report due to be released later on Friday, with analysts estimating that the US is about to shed 650,000 jobs.

The world's largest economy cut 598,000 jobs in January, the most since 1974.

A new round of job cuts in the US is expected to push down markets even further [AFP]
"The current recession, which initially affected the housing and financial sectors, has now disappointingly spread across a broad swath of the economy," Mike Fitzpatrick at MF Global, said.

Fears about the fate of General Motors mounted after the Detroit company said it could be liquidated through bankruptcy following concerns by auditors over its "substantial doubt" and its ability to stay afloat.

European markets fell after the European Central Bank and the Bank of England each cut interest rates by half a percentage point, to record lows, in the face of increasingly dire economic news.

London's FTSE 100 index lost 3.18 per cent while the Frankfurt DAX shed 5.02 per cent and the Paris CAC 40 fell 3.96 per cent.

Despite a big rally in global markets earlier in the week, markets across Asia reflected disappointment on Friday over China's failure to announce new stimulus measures.

However, China's economic leaders said that the economy is already in recovery due to past fiscal and monetary stimulus.

"The economic figures are stabilising and recovering, which demonstrates that the policies have begun to show an impact," Zhou Xiaochuan, central bank governor, said.