MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.5%. Japan's Nikkei lost 1.8% and South Korea's Kospi shed 2.2%.
Asian stocks fell early on Friday, following Wall Street, as fears took hold of a China-led deceleration in global growth. The dollar continued retreating on shrinking expectations of an US interest rate hike in September.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.5%. Japan's Nikkei lost 1.8% and South Korea's Kospi shed 2.2%.
Eyes remained fixed on how the Chinese equity markets fare later in the session. The recent plunge signified a weakening Chinese economy in the view of global investors, raising prospects of slower inflation, weaker demand for commodities and a currency war after Beijing devalued the yuan last week.
The August Caixin/Markit manufacturing index due at 0145 GMT will offer the latest glimpse into the health of the world's second largest economy. Weaker-than-expected July data had dashed hopes that the economy was stabilising and economists polled by Reuters expect another contraction in factory activity in August.
Shanghai stocks have already lost roughly 8% this week, pushing the S&P 500 to a six-month low overnight.
"The US markets have held up well of late, being viewed as somewhat of a safe-haven. This view seems to have deteriorated somewhat with the S&P 500 closing below its multi-month trading range - a fate the credit markets and the U.S. yield curve have been screaming for some time," wrote Chris Weston, chief market strategist at IG in Melbourne.
The tumble in Wall Street pushed safe-haven US Treasury yields further down. Yields were already feeling a downward pull after minutes from the Federal Reserve's July meeting offered little clue of a near-term rate hike, denting expectations of a tightening in September.
Lower Treasury yields in turn weighed on the dollar. The U.S. currency traded near a three-week low of 123.33 yen after sinking from an overnight high of 124.16.
The euro hovered near a two-month high of $1.1254 after surging 1.1% on Thursday.
In addition to China worries, emerging markets felt extra tremors after Turkey's lira plunged to a record low against the dollar on Thursday after coalition talks that had been running for months collapsed.
In commodities, U.S. crude oil held to gains after bouncing from 6-1/2 year lows. A weaker dollar and the formation of the first hurricane of the 2015 Atlantic season supported US crude , which stood little changed at $41.10 after touching the multi-year low of $40.21 on Thursday.
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