Asia's biggest markets again closed sharply lower Tuesday, with hefty falls in Japan and South Korea extending the Asian slump of recent days.

Tokyo's Nikkei average plunged to a three-month low, dropping 1.63 percent to finish just below the 15,600 level, while the broader Topix suffered an even bigger fall of 2.27 percent.

In Seoul the Kospi closed 0.65 percent lower after being down as much as 1.5 percent earlier in the day.

Elsewhere, Taiwan fell 1.36 percent, New Zealand ended 1.65 percent lower and Australia finished 0.34 percent in the red.

Hong Kong and Singapore were initally weaker but are showing slight gains heading towards the close.

The declines come after a down day on Wall Street, in Europe and in India, where trading was halted at one point Monday after a 10 percent plunge. India is up slightly in early trade Tuesday (Full story).

Billions of dollars have been wiped from global stock markets over the past week as investors fret about inflation in the United States, oil prices, and the possibility of rising interest rates and slower growth in key economies.

In Japan auto makers and big banks ended well in the red Tuesday. Mitsubishi UFJ had the biggest fall, down 6.13 percent on a disappointing profit outlook, while No. 2 bank Mizuho lost 4.79 percent.

In particular, Honda, Nissan, Toyota, Sony, Canon and other exporters fell on uncertainty about the outlook for U.S. interest rates and on concern that growth may slow in the world's biggest economy.