The index, which had hit a record high on January 29, was on track for its sixth straight day of losses and stood to lose about 6 per cent on the week. Australian shares lost 1.7 per cent and South Korea's KOSPI fell 2.3 per cent.
"The correction phase in equities could last through February and possibly into March," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
"The rise in long-term US yields will have to settle for the correction phase to end. The surge in volatility has also prompted investors to sell risk assets, in turn feeding more volatility."
US markets remained the epicentre of the global sell-off, with the Dow plunging 4.1 per cent and the S&P 500 sinking 3.7 per cent overnight.
With Thursday's losses, both the S&P 500 and the Dow slid into correction territory, falling more than 10 per cent from January 26 record highs and showing that the dust was yet to settle from the sharp slide that began a week ago.
US stocks began to wobble last Friday after a healthy US labour market report sparked a spike in bond yields and fears of rising inflation which could trigger more central bank rate hikes.
Higher yields are seen hurting equities as they increase borrowing costs for companies and reduce their risk appetite. They also present a fresh alternative to investors, who may choose to allocate some of their money from equities to bonds.
The benchmark 10-year Treasury note yield rose as high as 2.884 per cent on Thursday, just below Monday's four-year high of 2.885 per cent. It last stood at 2.8312 per cent.
Treasury yields were pushed higher after the Bank of England said interest rates probably need to rise sooner, adding to expectations of reduced central bank stimulus globally.
In currencies, the dollar was down 0.15 per cent at 108.590 yen, having lost 0.5 per cent overnight. It was on track to lose 1.5 per cent against its Japanese peer on the week.
The Swiss franc gained 0.1 per cent to 0.9350 franc per dollar after advancing about 0.7 per cent the previous day.
The euro added 0.1 per cent to $1.2261.
The dollar index against a basket of six major currencies stood at 90.193 after touching a two-week high of 90.567 overnight.
The pound rose 0.1 per cent to $1.3930. It had reached $1.4067 overnight following the hawkish BoE comments.
Commodity-linked currencies sagged as crude oil prices fell to seven-week lows.
The Canadian dollar traded at C$1.2590 per dollar after weakening to a six-week low of C$1.2615 the previous day. The Australian dollar fell to $0.7766, its lowest since Dec. 28.
US crude futures were down 1.15 per cent at $60.44 per barrel after hitting a seven-week trough of $60.27 on Thursday amid fears of rising global supplies after Iran announced plans to increase production and US crude output hit record highs.