Mitsubishi UFJ Financial Group Inc. led declines in Japan after Goldman, Sachs & Co. said the nation's economy is probably in a recession. Komatsu Ltd., Japan's largest maker of construction machinery, slid after CLSA Ltd. slashed its rating. Advantest Corp. slumped after Merrill Lynch & Co. advised investors to sell shares of the maker of memory-chip testers.
The MSCI Asia Pacific Index dropped 2.1 percent to 142.93 as of 11:59 a.m. in Tokyo, taking its losses so far this year to 9.4 percent. A measure of the benchmark's volatility jumped to 61, the highest since October 1998. About eight stocks retreated for each that advanced.
Japan's Nikkei 225 Stock Average lost 2.6 percent to 13,274.93. Benchmarks in other markets open for trading declined. Australia is closed for a holiday.
MSCI's Asian index plunged 10 percent in the first two days of trading last week on concern that a weakening U.S. will affect economies elsewhere. A rebound following the Federal Reserve's surprise interest-rate cut failed to offset earlier losses.