Japan’s Nikkei 225 was down more than 4% at one point – dropping below 17,000 for the first time since September – before closing down 2.7% at 17,240.95, reports the BBC.
US shares had fallen by more than 2% as oil prices continued to decline and worries grew over prospects for US company earnings.
Weak economic data from Japan also dented investors’ confidence.
Government data showed that core machinery orders fell 14.4% in November from the previous month.
The orders were down for the first time in three months in the world’s third largest economy.
Brent crude prices, meanwhile, fell 0.9% to $30.05 a barrel after earlier hitting a fresh 12-year low of $29.73.
Bernard Aw, market strategist at trading firm IG, said oil prices would not see much recovery this year amid a supply glut.
‘Oil prices should continue to remain low, where a sustained pick-up is expected only in the third quarter of 2017,’ he said in a note on Thursday.