Asian stock markets were pummelled today by the possibility of slowing growth in China and a further reduction in US central bank stimulus.
Stocks sank as investors sought out havens such as the Japanese yen, which strengthened to a seven week high against the dollar, and gold, which was at its highest in more than two months.
Investors were awaiting a two-day meeting of the US Federal Reserve starting tomorrow, where officials are expected to reduce the central bank's monthly bond buying by another 10 billion dollars (£6 billion) to 65 billion dollars (£39.4 billion).
Recent signs of a sustained recovery in the world's biggest economy will play a big role in the decision by Fed officials to scale back stimulus for a second time.
Emerging markets have been propped up for years by investors seeking higher returns using a tide of so-called "easy money" from the Fed and other central banks but now that the end for those policies looks to be near, some investors are fleeing stocks.
The turmoil has slammed some places particularly hard, such as Argentina, where the peso dropped 16% against the dollar over two days last week.
"The growing turmoil in emerging markets is inflicting damage on risk assets across the board and no let-up is expected in the near term," said Mitul Kotecha, head of global markets research for Asia at Credit Agricole.
The global sell-off was triggered by the preliminary results on Thursday of a survey showing that China's massive manufacturing industry would contract in January for the first time in six months, the latest sign that a painful slowdown in the world's No 2 economy is likely to continue.
"We've seen brief slowdowns in China before," said Michael Every, head of financial markets research for Asia-Pacific at Rabobank.
"The difference is we don't expect to see rapid acceleration again this time, because they're trying to clamp down on credit growth to prevent non-performing loans going even higher than they are."
Japan's Nikkei 225 sank 2.3% to 15,023.08 as they dollar edged higher to 102.42 yen from 102.38 late on Friday. The yen has strengthened significantly in the past few days, which is negative for export stocks.
Hong Kong's Hang Seng lost 2% to 21,987.65 and Seoul's Kospi dropped 1.3% to 1,915.27. In mainland China, the Shanghai Composite Index dropped 0.7% to 2,031.24. Benchmarks in Taiwan, Singapore, Philippines, Indonesia and New Zealand also slipped.
The Australian stock market was closed for a holiday.
In the US on Friday, the Dow finished down 2% at 15,879 and the Standard & Poor's 500 fell 2.1% to 1,790. The Nasdaq composite fell 2.2% to 4,128.