The U.S. dollar hit a record low against the euro after the European Central Bank played down the prospects of an interest rate cut and did not express concerns about the euro's strength. The dollar also fell to a fresh three-year low against the yen . Oil prices held near a record $106 a barrel, fueling concerns of higher inflationary pressures at a time of slowing economic growth.

Japan's Nikkei 225 Average finished down 3.3 percent at a fresh six-week low, with investors dumping blue-chip exporters like Honda Motor on a stronger yen and fears of a U.S. recession, while silicon wafer maker Sumco Corp tumbled more than 10 percent after predicting weaker profits. In a broad selloff tracking sharp falls on Wall Street, in addition to Mitsubishi UFJ other banks such as Sumitomo Mitsui Financial Group took a beating.

South Korea's KOSPI ended 2 percent lower on local inflation fears after the Bank of Korea said inflation could exceed a previous forecast, adding raw materials costs were rising faster than expected. Shares that were sensitive to raw material costs such as POSCO and Daewoo Shipbuilding also retreated.

Australian shares dropped 3.1 percent, also hitting a six-week low, with financials leading declines. Worries abounded that Australian banks would be hit by further bad debts after National Australia Bank warned it would book a provision on its A$110 million (US$101.8 million) loan secured by Allco Finance Group shares. Allco slumped 16.7 percent after margin lenders took back a 14 percent stake in the troubled asset manager as collateral for unpaid debt.

Hong Kong's Hang Seng Index sank 3.6 percent as further signs that the U.S. was headed into recession sent investors running for cover, souring the debut of Chinese oil rigs manufacturer Honghua Group. Oil refiner Sinopec skidded on a broker downgrade, which comes after China earlier this week ruled out increases soon in oil product prices. Hong Kong Exchanges and Clearing, a barometer of investor sentiment, sank to levels not seen since August.

Singapore's Straits Times Index dropped 1.8 percent after U.S. markets tumbled on fears that a slowdown in the world's biggest economy would drag on global growth. Financials such as United Overseas Bank and SGX led the losses.

China's Shanghai Composite Index fell 1.4 percent as shares in Ping An Insurance tumbled, almost erasing the big gain which they posted on Thursday after shareholders approved the company's plan for a $17 billion equity issue.

