Gold hovered near three-year highs, the dollar weakened and Tokyo stocks tumbled to their lowest for three weeks last week as investors fled to safe havens on growing fears of war and acts of terror.
Oil prices hit seven-week peaks after Opec ministers promised to rein in rampant overproduction and a strike crippling oil exports from Venezuela entered its 12th day.
Fears of a US-led attack on Iraq and a media report that Baghdad may have helped an al Qaeda-linked group get nerve gas rattled financial markets already unsettled by surging oil prices and an uncertain outlook for the global economy.
Fanning the concern was news that North Korea was reactivating a nuclear plant and that Iran, according to US officials, was building two nuclear facilities of a type that might be used to make a nuclear weapon.
"Terrorism fears have resurfaced and as a result the dollar is weaker, combining to push the gold price higher," said David Thurtell, Commonwealth Bank of Australia's commodities strategist.
Worries over US accounting scandals resurfaced with a report in the Wall Street Journal that drugmaker Bristol-Myers Squibb Co. repeatedly and inappropriately massaged its finances to make its results match analysts' estimates. The company denied the allegations.
In Tokyo, stocks slumped as a stronger yen threatened the earnings of exporters such as Fuji Photo Film Co., which fell 4.7 per cent.
The benchmark Nikkei average tumbled 2.2 per cent to 8,516.07, its eighth consecutive fall and its longest losing streak in two years. The index is just 2.6 per cent above a 19-year closing low hit a month ago.
"The biggest weight on stocks today is that worries about war in Iraq as well as rising global tensions are weakening the dollar - that makes it a bad time to buy exporters," said Masatoshi Sato, manager at the equity division of Mizuho Investors Securities in Tokyo.
South Korean shares lost one per cent, hurt by rising tension over North Korea.
Money poured into gold, a traditional haven in troubled times, keeping bullion prices close to a three-year high hit in New York around $332.60 an ounce. Spot gold, currently quoted around $332.25, has gained almost 20 per cent in 2002.
"Technically, it looks like it could go as far as $345 in the next month or so and that's a fairly important technical level," Thurtell said.
The euro was trading around $1.0180 a touch weaker from late New York levels and off a five-month peak of $1.0196 set in US trade. The dollar was quoted at 122.64 yen down from its late New York level of 122.70.
Oil prices climbed after ministers of the Organisation of Petroleum Exporting Countries last Thursday agreed to cut supplies.
US Treasuries were flat in Asia after short-dated notes gained overnight on the safe-haven flows. Japanese government bonds ticked up.
Smaller Asian markets mostly tracked the US lower, with Hong Kong and Singapore both off about one per cent at their midday breaks. Australia closed down 0.6 per cent and Taiwan lost 1.75 per cent. The pan-region MSCI Asia Pacific Free Index was down 1.2 per cent at a three-week low.