Hong Kong and Shanghai led an Asian sell-off Friday, as markets followed Wall Street lower and oil prices weakened on the last trading day before Christmas.
Regional stocks mirrored negative sentiment globally, with shares of US retailers falling sharply and European stocks under pressure over worries about Italy's ailing Monte dei Paschi di Siena bank.
Another troubled European lender, Germany's Deutsche Bank, said Friday it had agreed to pay a total of $7.2 billion to settle a case with the US Department of Justice over its role in the subprime mortgage crisis.
Shanghai suffered the sharpest downturn Friday of almost one percent, while Hong Kong slid 0.51 percent in afternoon trade and Sydney shed 0.28 percent on a shortened trading day in Australia ahead of the Christmas holiday.
Tokyo was closed for a public holiday, Singapore fell 0.30 percent mid-afternoon and Seoul edged up 0.01 percent.
"Hong Kong stocks are troubled by capital outflows," Ben Kwong, executive director at KGI Asia in Hong Kong, told Bloomberg News.
China is facing massive capital outflows as investors seek better and more stable investments abroad.
Traders on the mainland were also grappling with fears over rising borrowing costs in the world's two largest economies.
The US Federal Reserve raised borrowing costs earlier this month, while China has tightened monetary conditions.
And oil struggled Friday, with both contracts down.
Asian markets were hit after the Dow's closely monitored quest to hit 20,000 points struck another roadblock Thursday, with declines by retailers Wal-Mart Stores and Home Depot contributing to the index's second straight fall.
- Italy bank bailout -
In forex trade, the yen -- which has fallen sharply against the greenback since Donald Trump's shock US presidential election win in November -- rose against the dollar Friday.
However, analysts tipped the US currency to build on its recent strength in the New Year.
"Going into next year, we are confident the dollar will continue to make headway. It will be the currency that appreciates in 2017, it's just a question of how much," Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh, told Bloomberg News.
Observers are betting Trump's plans for a fiscal stimulus will stoke growth in the US, and speculation of higher spending has already sent the dollar to near a 14-year high against the euro.
Mainland Chinese investors have been fretting over a weakening yuan, which has plunged 13 percent against the greenback since its peak in January 2014.
The mood in Asia remained downbeat despite news Friday the Italian government has approved a bailout plan to rescue the country's struggling banks, with Monte dei Paschi di Siena (BMPS) likely the first in line to receive state aid.
BMPS is at the centre of a crisis in Italy's financial sector, which includes some 700 banks and is buckling under the weight of bad loans estimated to total 360 billion euros.
The plight of the stricken Italian lender has sparked fears of a possible rekindling of the eurozone debt crisis.
- Key figures around 0700 GMT -
Tokyo - Nikkei 225: Closed
Hong Kong - Hang Seng: DOWN 0.51 percent at 21,525.86
Shanghai - Composite: DOWN 0.94 percent at 3,110.15 (close)
Euro/dollar: UP at $1.0444 from $1.0438
Dollar/yen: DOWN at 117.37 yen from 117.56 yen
Pound/dollar: DOWN at $1.2288 from $1.2373
Oil - West Texas Intermediate: DOWN 31 cents at $52.64 per barrel
Oil - Brent North Sea: DOWN 26 cents at $54.79
New York - Dow: DOWN 0.1 percent at 19,918.88 (close)
London - FTSE 100: UP 0.3 percent at 7,063.68 points (close)