The euro also dropped 1% against the safe-haven Swiss franc yesterday, its biggest daily fall since September, and last stood at 1.1445 francs.
Spain's bond-yield spread with Germany also went to its widest this year at almost 1.35 percentage points ES10YT=RR and Madrid's IBEX bourse .IBEX closed down 2.5 percent.
A power struggle between Italy's presidency and populist parties today shook global markets and called the country's continued membership in the European single currency into question. Shares fell in Southeast Asia and Taiwan.
Equity futures signaled a stronger open on Wall Street, after Tuesday's harsh session which saw all three USA indexes lose between 0.5-1.2 per cent, led by financial sector stocks.
Italy's Premier-designate Carlo Cottarelli says "new possibilities" have emerged to form a government based on the outcome of March 4 elections. In Europe, the German DAX lost 1.5 per cent and Britain's FTSE 100 and the French CAC 40 both sank 1.3 per cent. He added that he saw no immediate danger to the stability of the wider financial system.
Away from Europe, the focus was on the on-again, off-again U.S.
CURRENCIES: New jitters about the stability of the euro sent the currency's value against the dollar to its lowest level in nearly a year. "That being said, a heavy data calendar from Wednesday could shift some attention back to economic growth and monetary policy", Jingyi Pan of IG said in a commentary. The dollar fell to 108.53 yen from 109.77 yen.
Reflecting the move to safer assets, the yield on U.S. government bonds fell to 2.78 percent, the lowest percentage since the beginning of April, from 2.93 percent. By mid-afternoon Asia time it was at 2.81 per cent.
A top North Korean official was headed to NY on Tuesday for talks with U.S. Secretary of State Mike Pompeo, the latest indication that the summit between President Donald Trump and North Korean leader Kim Jong Un may go ahead next month.
Brent futures traded around $75.50 per barrel, well off recent 3-1/2-year highs above $80. Oil prices have slumped in the last week following reports that OPEC countries and Russian Federation could start pumping more oil soon.