HONG KONG (MarketWatch) -- Asian stocks came under relentless selling pressure for the second straight session on Tuesday, a day after fears the U.S. economy could slip into a recession triggered a sell-off that spread to Europe and Latin America.

India's Sensitive Index was the most volatile in the region and suffered the steepest intraday losses for the second straight session. The index, which finished 7.4% lower in the previous session, was recently down 8.9% at 16,040.13. At that level, the index has already lost around 16% from Friday's close.

Things were equally downbeat elsewhere.

“ 'It doesn't look good at all. We expected it to fall, but nobody expected this kind of correction.' ” — Sharmila Joshi, trader

Japan's Nikkei Stock Average shed 5.7% to 12,573.05, while the broader Topix index skidded 5.7% to 1,219.95. Earlier in the day, the Nikkei dropped as low as 12,572.68 -- its lowest level since September 2005.

Hong Kong's Hang Seng Index slumped 8.7% to end at 21,757.63, as the sell-off deepened from the previous session, when it tumbled 5.5%. The Hang Seng China Enterprises Index plummeted even more, sinking 12% to 11,911.91. See related story.

Australia's S&P/ASX 200 extended its loss-making run into the 12th straight session, ending down 7.1% at 5,186.80 and setting a 52-week closing low, while New Zealand's NZX 50 index took its losses into the 14th session, dropping 1.1% at 3,607.13. South Korea's Kospi shed 4.4% at 1,609.02.

China's Shanghai Composite, which fell more than 5% in the previous session, sank 7.2% to 4,559.75, its lowest close since August, and Taiwan's Weighted index tumbled 6.5% to 7,581.96, a 10-month low. Emerging markets page

Singapore's Straits Times index, which lost 6% in the previous session, dropped 4.9% to 2,773.36 and Indonesia's JSX Composite tumbled 9.4% to 2,252.49 by late afternoon.

Indian finance minister urges calm

In India, trading was halted automatically earlier in the day for an hour after the Sensex dropped 11.5% in the early minutes. The index trimmed losses after Finance Minister P. Chidambaram asked investors to remain calm during the 60-minute break.

"There is no reason to allow the worries of the western world to overwhelm us... Our economy is different, is strong," said Chidambaram, according to a Bloomberg report.

Vinod Sharma, head of research at Anagram Securities in Ahmedabad, attributed the sharp fall to turmoil in the U.S. financial markets, selling pressure from leveraged investors and absence of adequate liquidity in the market.

"Only if the market ends higher from yesterday's closing level will there be any semblance of order returning to the market and pressure on liquidity will ease. Unless that happens, stocks will continue to be hammered," said Sharma.

"It doesn't look good at all. We expected it to fall, but nobody expected this kind of correction," said Sharmila Joshi, a trader with Prabhudas Lilladher in Mumbai.

Exporters a worry

Tim Rocks, regional strategist for Macquarie Research, said investors were likely to worry about the impact of a U.S. economic slowdown on exporters in Asia.

"Whenever you have got any kind of disappointment in global growth, you always have big downgrades across Asia and particularly in the export-dominated markets," said Rocks. "On a six-month view, we're still going to have a lot of earnings downgrades in Asia, linked to the U.S. cycle." Global markets page.

Rocks said a rate move from the U.S. Federal Reserve is "the next great hope for the markets now," adding that a U.S. interest rate cut would "certainly be a break for the markets."

Silver lining?

In the past two days, Japan's Nikkei has fallen 10.2%, Hong Kong's Hang Seng has dropped 13.7%, the Shanghai Composite has shed 12% and Australia's S&P/ASX has given up nearly 10%. Indexes in Mumbai, Jakarta and Singapore were on their way to registering double-digit percentage losses.

“ 'I think the Hong Kong market is more or less near the bottom. Global markets have been oversold already and if there is the U.S. government announces some kind of concrete strategy, we could see a rebound in the short-term.' ” — Peter Lai, DBS Vickers

Some analysts, however, said the steep declines had a silver lining.

"I think the Hong Kong market is more or less near the bottom. Global markets have been oversold already and if there is the U.S. government announces some kind of concrete strategy, we could see a rebound in the short-term," said Peter Lai, director at DBS Vickers in Hong Kong.

Separately, Anup Bagchi, chief operating officer at Indian online brokerage ICICI Direct.com, said it was a good time for investors to buy into shares "which have good value and have fallen by 25% to 30%" from their top.

Regional detail

Financials came under selling pressure, with shares of Mizuho Financial Group (8411) MFG, -4.79% sinking 8.2% in Tokyo, Macquarie Group (MQG) slumping 11.4% in Sydney and Kookmin Bank KB, -2.90% shares dropping 3.9% in Seoul.

In Hong Kong, shares of market heavyweight HSBC Holdings (5) HBC, +0.48% tumbled 8.1%, Singapore's DBS Group Holdings shed 2.7% and India's HDFC Bank HDB, +0.86% declined 7.1%, even after it reported better-than-expected quarterly earnings Monday.

A drop in crude and metal prices hurt resource stocks as well, with Woodside Petroleum (WPL) WOPEY, -0.53% plummeting 10% and Rio Tinto (RIO) RTP slumping 11.6% in Sydney. Shares of commodities trader Marubeni Corp. (8002) dropped 8.5% in Tokyo.

In Hong Kong, shares of PetroChina Co. (857) PTR, -1.37% gave up 14.9% and Aluminum Corp. of China ACH, +0.19% (2600) stumbled 14.5%. In Seoul, Posco PKX, -0.83% shares dropped 4.6%. In Mumbai, shares of refining major and market heavyweight Reliance Industries skidded 9.2%, while shares of Oil & Natural Gas Corp. dropped 10.7% by late afternoon.

Japanese exporters also ranked among losers. Shares of Toyota Motor Corp. (7203) TM, -1.29% dropped 7.2% and Sony Corp. (6758) SNE, +0.25% fell 6.9% on concerns over the yen's rally recently.

In currency trading, the U.S. dollar gained 0.7% to 106.47 yen, recovering some of its recent losses against the Japanese currency, while the Australian dollar fell 0.2% to 91.46 yen.

Crude oil prices fell below $90 a barrel in electronic trading on worries related to U.S. demand. February futures of the commodity were recently $3.70 lower at $86.87 a barrel.

U.S. markets were closed Monday for the Martin Luther King Jr. Day holiday. U.S. stock futures were signaling a sharply weaker start.