Asian stocks hit two-month lows on Wednesday as investors fretted about the impact of U.S. President-elect Trump's proposed tariffs on inflation and interest rates.
Trump's choice of China hawks in his Cabinet and China's faltering growth also kept investors on the sidelines.
U.S. Treasury yields pushed higher and the dollar rally gained further momentum as investors awaited key U.S. consumer and producer inflation readings this week for hints of a possible Federal Reserve rate cut in December.
Traders are currently pricing in about two Fed rate cuts through June, against almost four seen at the start of last week.
Gold traded around $2,600 per ounce levels in Asian trade while oil edged up slightly on signs of near-term supply tightness but remained near their lowest in two weeks, a day after OPEC revised down its forecasts for global oil demand this year and next.
Japanese markets tumbled as five-year government bond yield hit a 15-year high amid increased bets for the Bank of Japan to raise interest rates.
The Nikkei average fell 1.66 percent to 38,721.66 as data revealed Japan's producer price index rose by 3.4 percent year-on-year in October, beating expectations. The broader Topix index settled 1.21 percent lower at 2,708.42 while the yen hovered near the key level of 155 per greenback.
Producer prices in Japan were up 0.2 percent on month in October, the Bank of Japan said on Wednesday. On a yearly basis, producer prices climbed 3.4 percent.
Export prices were flat on month and up 0.6 percent on year, the bank said, while import prices fell 0.2 percent on month and 2.1 percent on year.