BEIJING (dpa-AFX) - Asian stocks fell sharply on Tuesday to extend losses from the previous session as the latest Middle East conflict entered its fourth day.
U.S. President Donald Trump suggested the war may last four to five weeks but could 'go far longer than that,' raising concerns a prolonged conflict could lead to a substantial spike in inflation.
Gold ticked lower toward $5,300 an ounce as the dollar held gains on risk-off sentiment in financial markets.
Oil prices continued to rise, with Brent contract surging over 4 percent to trade above $80 a barrel in Asian trade after Iran's Revolutionary Guard Corps announced that the Strait of Hormuz has been officially closed.
Supply concerns were also worsened by the attacks on several oil refineries, including Saudi Aramco's oil facility in Ras Tanura.
China's Shanghai Composite index fell 1.43 percent to 4,122.68 as investors braced for the annual session of China's top political advisory body.
Hong Kong's Hang Seng index dipped 1.12 percent to 25,768.08 on the back of risk-off sentiment seen across major Asia-Pacific markets.
Japanese markets lost ground as government bond yields surged after a strong 10-year bond auction. Investors also digested weak data that showed Japan's unemployment rate increased to 2.7 percent in January after holding at 2.6 percent for four consecutive months through December.
The Nikkei average slumped 3.06 percent to 56,279.05, dragged down by energy and defense stocks.
The broader Topix index ended down 3.24 percent at 3,772.17. Eneos Holdings slumped 6.3 percent, IHI shed 4.9 percent and Mitsubishi Industries tumbled 5.3 percent.
Seoul stocks nosedived as traders returned from a public holiday on Monday. The Kospi average plunged 7.24 percent to 5,791.91, marking the biggest fall in more than 18 months amid heightened Middle East tensions following U.S. strikes on Iran since the weekend.
Tech and auto stocks paced the declines after recent rallies. Samsung Electronics lost nearly 10 percent, SK Hynix gave up 11.5 percent and Hyundai Motor slumped 11.7 percent.
Defense stocks surged, with heavyweight Hanwha Aerospace rallying 19.8 percent and Lignex1, maker of air defense systems, climbing 30 percent.
Australian markets fell sharply after closing little changed in the previous session.
The benchmark S&P/ASX 200 tumbled 1.34 percent to 9,077.30, tracking higher bond yields after RBA Governor Michele Bullock warned there is risk inflation expectations could rise if the Iran war continues for a prolonged period.
'Every meeting is live,' Bullock said about the upcoming March board meeting. The broader All Ordinaries index settled 1.41 percent lower at 9,297.20, with mining stocks leading losses.
Across the Tasman, New Zealand's benchmark S&P/NZX-50 index slid 0.27 percent to 13,620.21, extending losses from the previous session on concerns that higher energy prices will feed inflation.
Overnight, U.S. stocks recovered from an early slide to end mixed following joint U.S.-Israeli strikes on Iran and Tehran's subsequent retaliation.
The tech-heavy Nasdaq Composite rose 0.4 percent as Nvidia announced a $4 billion investment into two U.S. photonics players.
The S&P 500 finished marginally higher after a federal court rejected the Trump administration's efforts to delay legal proceedings linked to tariff refunds.
The narrower Dow dipped 0.2 percent as a survey showed U.S. manufacturing activity expanded at a slower rate in February.
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