SEOUL, South Korea (AP) -- Japan's Nikkei 225 stock average dived more than 4 percent Tuesday as weakness in U.S. and Chinese manufacturing sent Asian markets sharply lower.
The slide in Asian stocks followed losses Monday in Europe and on Wall Street after sentiment was hurt by the weak data from the world's two biggest economies.
The Nikkei tumbled 4.2 percent to 14,008.47 and is down 14 percent over the past month. Toyota Motor Corp. sank 5.7 percent before reporting a fivefold surge in its quarterly profit and Sharp Corp. plunged 8.4 percent.
There were signs U.S. markets might stabilize with Dow futures up 0.2 percent and S&P 500 futures up 0.4 percent. But market strategists said investors should be cautious about plowing back into stocks.
"Investors should steer clear of risk assets over the short term as the turmoil does not look like it will be over anytime soon," Credit Agricole CIB said in a report.
Investment sentiment was already fragile because of signs of stress in the financial markets of nations such as Turkey and Argentina. The Federal Reserve is incrementally withdrawing massive stimulus as the U.S. economy recovers from 2008 financial crisis, sending shockwaves through markets that were driven higher by the tide of cheap money created by the Fed's policy.
Sentiment took a further hit after an official Chinese manufacturing survey showed that factory output grew at a slower rate in January compared with December.
The sell-off in stock markets accelerated after an equivalent U.S. survey showed an unexpected drop in January. The ISM index fell to 51.2 points from 56.5 the previous month.
Analysts say that may be due to the extreme cold weather that hit the country, but is nevertheless disappointing for an economy that hopes to be rebounding.
Some of the slowdown in Chinese manufacturing might be due to Lunar New Year holidays spanning the end of January and early February, reducing working days in both months. But analysts said there could also be an underlying slowdown at work.
"True, there are distortions related to the timing of Lunar New Year, and a pollution and corruption crackdown by Beijing, but the message is still that we are seeing slower growth," Michael Every, head of financial markets research for Asia-Pacific at Rabobank, said in a report.
South Korea's Kospi shed 1.7 percent to 1,886.85 with market heavyweight Samsung Electronics Co. 1.8 percent lower.
Hong Kong's Hang Seng declined 2.7 percent to 21,443.63 on its first day of trading following a 4-day weekend for Lunar New Year. Markets in China and Taiwan were closed. Australia's S&P/ASX 200 dropped 1.8 percent to 5,097.10. Stocks in the Philippines and Thailand also fell.
The U.S. stock market finished its worst day in more than seven months Monday. The Dow Jones industrial average sank 2.1 percent and the Standard & Poor's 500 dived 2.3 percent. The Nasdaq composite closed 2.6 percent lower.
In energy markets, benchmark U.S. crude for March delivery was up 12 cents at $96.55 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.06 to close at $96.43 on Monday.
The euro rose to $1.3533 from $1.3523 late Monday. The dollar fell to 101.06 yen from 101.14 yen.
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