In Hong Kong, the energy sector was down 4.9%, dragging down the Hang Seng Index by 1.9%. The Hang Seng China Enterprises Index of Chinese firms trading in Hong Kong was down 2.5% at 7970.69. That benchmark hit a closing low of 7835 last Thursday, and currently trades at its lowest levels since 2009.

The Nikkei Stock Average fell 1.8%, with Tokyo-listed oil developer Inpex Corp. down 4.3%.

The Shanghai Composite Index was down 2% and South Korea’s Kospi was down 0.9%. Markets in Australia and India are closed for holidays.

The same concerns that have haunted stocks this year remain: Oil prices are trading near multiyear lows, and investors are worried about a slowing China and plans by the U.S. Federal Reserve to raise interest rates. But increasingly, the oil market is driving the action.

"The volatility [in oil] is not helping restore confidence back in the market,” said Robert Levine, head of Asian sales and trading at brokerage CLSA. "It’s not easy to put on new bets.”

Brent crude oil gave up gains earlier in Asia to trade down 1.5% at $30.03 a barrel. In the U.S., prices had fallen 5.7% on Monday to $30.34 a barrel.

Brent oil is now down 19% year-to-date. But its losses haven’t helped airlines, which usually benefit from lower costs on oil. China South Airlines Co. Ltd. and Japan Airlines Co. Ltd. slipped a fraction on Tuesday, leaving them down 21% and 1.6% respectively year-to-date.

Worries about slower global growth are overshadowing the benefits of lower oil, explained Mr. Levine.

In Japan on Tuesday, shares were getting pressure from the Japanese yen, which strengthened by 0.2%, to ¥118.09 per U.S. dollar. Mitsubishi UFJ Financial Group Inc. was down 3.2%.

South Korean shares fell after data showed that the country’s economy slowed sharply in the final quarter of 2015. Gross domestic product expanded at a seasonally adjusted 0.6% in the October-December period from the previous quarter, after a revised 1.3% gain in the third quarter.

The latest growth figure was exactly in line with the median forecast of a 0.6% expansion in the fourth quarter, according to a Wall Street Journal survey.

Gold, a haven, was up nearly 0.7% at $1,112.80 a troy ounce early in Asia.

In the U.S., the Dow Jones Industrial Average dropped 1.3% overnight.

(WSJ)