HONG KONG - Asian markets slipped on Tuesday as fears that leading economies could see a double-dip recession weighed on confidence while the strengthening yen sent Tokyo shares to a 15-month low.
Uncertainty caused by an inconclusive general election weighed on the Australian index, with sentiment there also hit by a fresh knock-back for mining giant BHP Billiton.
Tokyo fell 1.18% by the break, a slight recovery after diving through the 9,000-point mark to its lowest since May 2009, as exporters were hit by the strong yen, which makes their goods expensive overseas.
"There is a sense of resignation and we're all just watching how far stocks fall," Kenichi Hirano, operating officer at Tachibana Securities, told Dow Jones Newswires. "We're entering a bear market now."
The dollar was trading at 85.12 yen in Tokyo early morning trade on Tuesday, down from 85.17 yen in New York late Monday.
The euro fell to $1.2636 from 1.2654, and to 107.57 yen from 107.78.
Market-watchers are keeping an eye on Japanese authorities after leaders including Prime Minister Naoto Kan said they were monitoring the yen's movements closely.
However, they were disappointed Monday after Kan and Bank of Japan governor Masaaki Shirakawa spoke by phone without an announcement of moves to stem the the yen's rise.
Sydney fell 1.08%, Hong Kong was 0.36% off and Shanghai shed 0.16%.
"Fear has struck back into the hearts of equity investors. It is the probability of a second (global economic) dip that is in their minds," Roger Tan, head of SIAS Research in Singapore, said.
And RBS head of Sydney sales trading Justin Gallagher said: "I think it's just a recycling of the double-dip (recession scenario). The economic data is certainly not showing any upwards momentum -- if anything it's tempering."
Traders are nervously awaiting key US figures this week, including unemployment, existing home sales and second-quarter growth revision data, with analysts expecting a severe downgrade from an initial estimate of 2.4 percent.
Sydney fell as heavyweight BHP was sold off after Canada's Potash Corp, the world's largest fertiliser maker, formally rejected a hostile takeover from the mining giant worth $40 billion, saying it was exploring other offers.
Potash said in a statement that the bid made by the Anglo-Australian miner direct to its shareholders last week was "wholly inadequate"
BHP was 1.39 percent lower and Rio Tinto lost 0.60 percent.
The market was also softened by political uncertainty after Saturday's election in Australia provided no clear winner, leaving the two leading parties trying to form a coalition government.
Regional investors were given a weak lead from the United States, where the Dow slipped 0.38%.
Manila was 1.1% off in late trade, with profit-taking adding to downbeat sentiment following Monday's bloody hostage-taking, which ended in the deaths of eight Hong Kong tourists.
Oil slipped, with New York's main contract, light sweet crude for delivery in October, falling 35 cents to $72.75 a barrel.
London's Brent North Sea crude for October slipped 30 cents to $73.32.
Gold opened at $1,220.50-$1,221.50 an ounce, down from Monday's closing price of $1,227.50-$1,228.50.