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Japan's Nikkei 225 index was down 1.3%, with Hong Kong's Hang Seng also dropping by 1.5%.




However, South Korea's Kospi was up 1%, reversing an earlier
decline of close to 4%. And Australia's ASX index also recouped earlier
losses.




Analysts said that investors were trying to juggle a number of contradictory economic indicators.




Experts added that markets are likely to remain choppy in coming sessions.




"We have had volatile markets in the past that have headed in
one direction, but this time around no one seems to know what is going
to happen," Andrew Robinson of Saxo Capital Markets told the BBC.




"On Tuesday, you had the Dow Jones up by 4%. If had you asked me then, I would have said it looks like we have bottomed out.




"But you wake up this morning to find that it is down by the same magnitude again."



Spreading concerns

Asian markets saw a sell-off in early trading, which was
triggered by rumours that France may become the next country to lose its
triple A credit rating.





However, analysts said the emergence of new worries that the
region's biggest economies may also be vulnerable has fanned fears
further.




"As the economies get larger, the chances to bail them out are going to get slimmer," said Mr Robinson.




On Wednesday, France's Cac share index ended down 5.5%
despite the French government's assurance that its credit rating was not
under threat.




While ratings agencies Moody's, Standard & Poor's and
Fitch reaffirmed France's AAA credit rating, analysts said investors
remained skepitcal about the country's financial health and the
stability of its banking sector.




Shares of French lender Societe Generale fell as much as 20%
after it was forced to "categorically" deny it was under financial
pressure. The shares ended 15% lower.




"I think there's concern about just how much Greek debt
French banks really do hold and how much the European Central Bank is
willing to backstop all this," said Bret Barker of TCW.



Shifting focus

The uncertainty surrounding the US and European markets has
seen investors shift their focus towards purchasing assets that are
considered as offering greater protection from market volatility.




That has seen gold record its best rally in more than two
years, and on Thursday in Asia it climbed above the $1,800 per ounce
mark for the first time.




Analysts said that given the current global environment, the rise in gold is likely to continue.




"We don't see anything out there that's going to reverse the appetite for gold," Michael Lewis of Deutsche Bank.




"Given gold is a financial asset, it's interesting that it doesn't look that expensive at these sort of levels." he added.



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UK banking shares were also hit, with Barclays down 8.7%, Royal Bank of Scotland 7.3%, and HSBC 5.3%.




On Wall Street, the Dow Jones Industrial Average lost 4.6%,
or 520.29 points to close at 10,719.48 in its fifth straight day with a
rise or fall of more than 400 points.




New York's broader S&P 500 index fell 51.81 points, or 4.42%, to 1,120.72.