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 Japan's Nikkei 225 index fell 3.3 percent to close at 12,782.80 as investors sold exporters' shares amid the dollar's drop to a three-year low against the yen during Asian trading.
Hong Hong's Hang Seng index closed down 3.6 percent, bringing its decline since the start of the year to 19 percent.
Australia's benchmark index sank 3.2 percent while in Seoul the Korea Stock Price Index declined 2 percent. India's benchmark Sensex was down 4 percent in afternoon trading, paring earlier losses of over 5 percent.
In early European trading, the U.K.'s benchmark FTSE 100 sank 1.3 percent, while Germany's DAX fell 1.5 percent. France's CAC 40 declined 1.3 percent.
Concerns about further fallout from the U.S. credit crisis grew Thursday after the Mortgage Bankers Association said the proportion of all mortgages nationwide that fell into foreclosure jumped to a record 0.83 percent in the final quarter of 2007.
Separately, the Federal Reserve reported that Americans' home debt exceeded their equity for the first time since the central bank began tracking the figures in 1945. Homeowners' percentage of equity fell to 47.9 percent in the fourth quarter.
The Dow Jones industrial average fell 1.75 percent Thursday to 12,040.39.
"We are worried about the U.S. market," said Shim Jae-youb, a strategist at Meritz Securities Co. in Seoul.
Investors were bracing for a key U.S. jobs report later Friday. Economists on average were predicting a modest gain in February payrolls, though some expect a decline. Shim said investors were "pessimistic" about the report.
U.S. stock index futures were down, signaling further declines on Wall Street when trading opens Friday. Dow futures were down 40 points, or 0.3 percent, to 12,030.
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 In Tokyo, investors sold exporters' shares like Sony Corp. and TDK Corp. after the dollar fell against the yen. In early European hours, the U.S. currency extended declines, trading at 102.05 yen.
A strong yen makes goods produced in Japan more expensive overseas and reduces the value of repatriated earnings.
Shim of Meritz also said that signs of potential credit defaults in the United States were weighing on sentiment.
He said news that Thornburg Mortgage Inc. this week failed to make a margin call, a payment to guarantee a much larger debt or investment, was a cause for concern.
Turmoil has engulfed global equities since last summer as rising default rates among U.S. mortgage holders with poor credit histories
-- the so-called subprime problem -- raised concerns of a spillover effect that could lead to recession in the world's largest economy.
U.S. consumer confidence dropped to a new low amid worries about growth prospects, the housing and credit markets and high energy prices.
Traders said that more bearishness could be expected.
"We still have some downside left in the market, which is sad to say, but that's the way it is looking trend-wise, it is still looking heavy," CMC Markets senior dealer Dominic Vaughan said of Australia's market.
Elsewhere, the Philippine Stock Exchange Index plunged 2.8 percent to a six-week low, while in mainland China the Shanghai Composite Index fell a more moderate 1.4 percent.
[Associated Press; By KELLY OLSEN]
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