"This is depressing because we are talking about a period before worries about a China-led slowdown in the global economy hit," said Hikaru Sato
Asian shares extended losses on Tuesday and European markets look set to follow after twin surveys showed China's manufacturing sector in the grip of its worst slump in several years, raising fresh fears about the health of its economy.
Financial spreadbetters expected Britain's FTSE 100 to open as much as 1.7 percent lower, Germany's DAX to open down as much as 1.9 percent, and France's CAC 40 to open 1.9 percent lower.
U.S. stock futures in Asia were down 1.5 percent.
China's official Purchasing Managers' Index (PMI) fell to 49.7 in August from the previous month's reading of 50.0, the weakest showing in three years.
Separately, the private Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) showed a final reading of 47.3 in August, the lowest since March 2009.
"Recent volatilities in global financial markets could weigh on the real economy, and a pessimistic outlook may become self-fulfilling," said He Fan, chief economist at Caixin Insight Group.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.6 percent, erasing its early gains. The index shed more than 10 percent in the month of August, its worst monthly performance since 2012, on fears of global fallout from slowing momentum in China.
Chinese shares were lower, with the Shanghai Composite Index down 1.2 percent and the CSI300 index down 2.2 percent. Both indexes skidded around 12 percent in August, their third straight monthly decline. China's stock markets have now lost nearly 40 percent of their value since mid-June despite unprecedented government support steps.
China's cooling demand is already taking a toll on the economies of its trade-reliant Asian neighbours. South Korea reported on Tuesday its exports fell 14.7 percent in August from a year earlier, worse than expected and the biggest drop in six years.
Losses on Wall Street also soured Asian sentiment after comments from Federal Reserve Vice Chairman Stanley Fischer heightened fears among investors of a potential U.S. interest rate hike in September.
Japan's Nikkei stock index was down 2.1 percent. The Nikkei lost 8.2 percent in August, its biggest monthly decline since January 2014.
Adding to the downbeat mood from the regional selloff, data released earlier on Tuesday showed that Japanese firms spent less on plants and equipment in April-June than in the previous quarter despite reaping record profits.
"This is depressing because we are talking about a period before worries about a China-led slowdown in the global economy hit," said Hikaru Sato, senior technical analyst at Daiwa Securities. "For this quarter and beyond, China's cooling demand could hit our economy."
The Australian dollar edged up against its U.S. counterpart, adding about 0.2 percent to $0.7125 after the Reserve Bank of Australia held interest rates steady as widely expected.
The U.S. dollar extended early losses, under pressure as investors shunned risk and remained wary ahead of U.S. employment data on Friday that could offer clues about the timing of the Fed's long-awaited hike to interest rates.
Later on Tuesday, investors will focus on a survey of U.S. manufacturing activity.
The greenback dropped 0.4 percent at 120.75 yen, while the euro rose about 0.5 percent to $1.1269.
In commodities trading, crude oil futures gave back some of their biggest three-day price surge in 25 years that saw prices soar more than $10 a barrel.
On Monday, oil jumped more than 8 percent on downward revision of U.S. crude production data and OPEC's expressed willingness to discuss curbs on output.
U.S. crude slipped 3 percent to $47.71 a barrel, while Brent lost 2.9 percent to $52.60 a barrel,