Asian equities came under pressure on Tuesday from a renewed selloff in oil overnight, ahead of the Federal Reserve's monetary policy decision on Thursday.
US crude fell below US$30 (S$43) a barrel in early trade after sliding as much as 7 per cent on Monday. Oversupply fears were to blame after Iraq's oil ministry told Reuters on Monday that the country had record output in December, with certain fields producing as much as 4.13 million barrels a day. A senior Iraqi oil official said separately that the country may raise output even further this year.
Oil's decline helped push US stocks sharply lower Monday, with the S&P 500 and Nasdaq more than 1.5 per cent lower and the Dow Jones Industrial Average off by almost 1.3 per cent as investors awaited a swath of major earnings reports, data and the Federal Reserve's policy statement later in the week. The US central bank begins a two-day meeting on Tuesday local time, but no rate action is expected. Still, attention will fall on its post-meeting statement Wednesday local time for commentary on recent market volatility.
Japan's benchmark Nikkei index snapped a two-day winning streak, losing more than 2 per cent within the first few minutes of trade.
Auto parts makers were in focus amid reports that auto parts makers are in the cross hairs of European regulators. Denso, Mitsubishi Electric and Hitachi fell between 2-3 per cent each after Reuters reported they are set to be fined for allegedly fixing parts prices; the amount could come up to 10 per cent of their global turnover.
McDonald's Japan slid 1 per cent on news the US parent firm may be considering selling a portion of its stake in the Japan business.
Steel plays also weakened after data on Monday showed 2015 steel exports fell to a four-year low; Kobe Steel and Nippon Steel lost more than 2 per cent each.
In South Korea, the benchmark Kospi eased more than 1 per cent after closing at a more than one-week high on Monday. Data released before the market open showed fourth-quarter gross domestic product more than halved, with growth rising a slower-than-expected 0.6 per cent on quarter, from a 1.3 per cent rise in the previous period.
"Overall for 2015, growth weakened to 2.6 per cent from 3.3 per cent in 2014 owing mainly to the MERS effect on private demand along with a sluggish external environment. Looking ahead, we expect a modest rebound in 2016 to 3.1-3.2 per cent as G3 economies continue to recover. Meanwhile, being a major oil importer, Korea should benefit from soft oil prices above all," said Mizuho economists in a morning note.
Among heavyweight stocks, Samsung Electronics tumbled nearly 2 per cent while automakers posted some of the biggest declines, with Hyundai Motor, Hyundai Mobis and Kia Motors down 1.4, 1.7 and 3.6 per cent, respectively.
Elsewhere, Taiwan stocks slipped 0.8 per cent and Singapore's Straits Times Index eased 0.5 per cent in early trade.
Australian markets are shut for the Australia Day public holiday.