European markets aren`t expected to be spared the selloff either. Financial spreadbetters are predicting Britain`s FTSE 100 .FTSE would open down by as much as 0.8 percent, Germany`s DAX .GDAXI 0.6 percent, and France`s CACM 40 .FCHI 1 percent.
"Investors are worried about a sharp slowdown in China ... but the biggest risk is a global recession, not just a China issue," said Steven Leung, a director at UOB Kay Hian in Hong Kong.
"If you look at Japan ... its economy is in bad shape. And economic situation is not good in Europe, either."
MSCI`s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slumped 2.3 percent, touching its lowest levels since June 2012 and extending early declines after Chinese shares opened lower.
China`s blue-chip CSI300 index .CSI300 and the Shanghai Composite Index .SSEC were down 2 percent and 1.9 percent respectively in afternoon trading.
Japan`s Nikkei stock index .N225 tumbled to 8-months, ending down 4.1 percent.
"There is a lot of red in Asian equity markets at the moment," said Martin King, co-managing director at Tyton Capital Advisors.
"Disappointing industrial profits in China continue to bolster concerns about growth and many investors are taking profits from the Nikkei and sitting in cash and alternatives, or repatriating capital to western markets in a perceived flight to quality."
Chinese industrial companies` profits fell at their fastest rate in four years, official data showed on Monday, sparking fresh fears about the strength of that country`s economy ahead the final reading of China`s Caixin Purchasing Managers` Index on Thursday.
On Wall Street overnight, major indexes all closed sharply down. The S&P 500 index .SPX hit a one-month low on bullish U.S. consumer spending data in August as it raised concerns the Federal Reserve could hike rates at a time of slackening global growth.
The Fed held off from raising interest rates at its meeting earlier this month, citing worries about the global economy, particularly China.
But New York Fed President William Dudley said the central bank remains on track for a likely rate hike this year and could move as soon as next month.
John Williams, head of the San Francisco Fed, also signaled support for an interest rate hike this year, though Chicago Fed chief Charles Evans sounded a far more dovish tone.
U.S. non-farm payrolls on Friday could add more clarity to the timing of a U.S. policy move, and prop up the sagging greenback.
For now, lower U.S. Treasury yields continued to pressure the dollar, as investors sought the safety of fixed-income assets.
The yield on the benchmark U.S. 10-year note < US10YT=RR> stood at 2.068 percent, below its U.S. close of 2.095 percent on Monday.
The dollar was down about 0.4 percent against its Japanese counterpart at 119.44 yen JPY=, well below Friday`s high of 121.24. The euro slipped about 0.2 percent to 134.55 yen EURJPY=R.
The euro edged up about 0.2 percent to $1.1264 EUR=, pulling further away from a low of $1.1116 touched on Friday. On Wednesday, a flash estimate of annual euro zone inflation is expected to show a zero reading in September, according to a Reuters poll.
The dollar index .DXY slipped about 0.2 percent to 95.816, extending the previous session`s 0.4 percent drop.
Crude oil futures remained under pressure after plunging nearly 3 percent overnight as the downbeat Chinese data fueled fears about global demand.
U.S. crude CLc1 was flat at $44.43 a barrel, while Brent LCOc1 wallowed around its previous close at $47.34.
Copper CMCU3 was 0.6 percent lower at $4,937.50 a tonne, within sight of a six-year low plumbed last month.
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