The Nikkei 225 Average shed more than 2 percent to hit a 15-month closing low, as Honda Motor and other Japanese exporters fell after the yen's sharp rise against the dollar and losses on Wall Street.

South Korea's KOSPI fell 3.37 percent to a three-week closing low, suffering its biggest daily percentage drop in three months, as fears over a U.S. economic recession hit exporters such as LG Electronics.

Australian shares fell 1.4 percent to a seven-week closing low as resource firms such as BHP Billiton fell on weaker oil and base metal prices, while persistent credit concerns weighed down on major banks. But global miner Rio Tinto extended its rally, hitting a fresh record during the session, on speculation that suitor BHP will have to lift its $140 billion bid, while Computershare gained on an earnings upgrade.

Hong Kong's Hang Seng Index tumbled nearly 4 percent, as investors fretted about Wall Street's three-day losing streak and more losses related to the U.S. subprime mortgage crisis. HSBC Holdings dropped over 3 percent, after a report that the global lender is expected to unveil further losses this week from its exposure to U.S. mortgages.

Singapore's Straits Times Index extended the morning's losses, dropping in line with falls in regional markets after Wall Street tumbled on Friday. Banks were leading the declines with DBS Group, United Overseas Bank, and Oversea-Chinese Banking Corp all sharply lower.

China's Shanghai Composite Index closed more than 2 percent lower after the central bank announced at the weekend that it would raise the ratio of bank reserve requirements, effective

from Nov. 26, in its latest monetary tightening. Worries about tightening monetary policy, sky-high stock valuations and heavy supply of new shares from public offers have undermined a bull run that had more than doubled the main index since the start of this year to last month's record high.