Asian shares have headed sharply lower, following the rout in global equities as fears over growth and lower commodity prices grow. Japanese shares hit an eight-month low as investors awaited the Bank of Japan's Tankan quarterly business confidence survey, due on Wednesday.
Fitch cut its credit rating for heavily indebted Japan by one notch on Monday, saying it has not done enough to plug a budget gap left by its decision to delay the second stage of a sales tax hike.
Japan's economy shrank 1.8% in the April-to-June period, worse than forecast and raising more questions about the government's economic policy. The official data confirmed that the world's third largest economy suffered its sharpest quarterly contraction since the 2011 earthquake disaster.
The United States and Japan are leading a fragile economic recovery among developed countries that could yet be blown off course if the Euro zone fails to contain its flaring growth crisis, the OECD said on Tuesday.
Japanese stocks rebounded Wednesday as concerns over the long-term impact of Friday's earthquake and tsunami on Japan's economy ease.