Asian stocks fell on Wednesday as fears of an entrenched global economic slowdown gripped investors, underlined by a weak factory survey from China, while the greenback firmed as investors fled to relatively safe-haven assets.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 2 per cent, with Australia down 1.8 per cent and South Korea falling 1 per cent. S&P mini futures fell 1 per cent after the weak China PMI.

"The industrial sector in China remains a concern indicating that the economy is not out of the woods yet while the Fed's comments last week indicate a glass half-empty view of the global economy," said Tai Hui, chief Asia market strategist at JP Morgan Asset Management in Hong Kong.

More evidence of an entrenched slowdown was evident as activity in China's factory sector shrank at a faster pace than expected in September, falling to its weakest level in 6-1/2 years as domestic and export demand continued to slump, a private survey showed.

China's stock markets took the weak data on the chin with main indices down between 2-3 per cent in opening trades.

Japanese markets are shut through Wednesday.

Fresh cracks in the commodities complex, amplified by drops in copper, raised concerns that a China-led slowdown may pose significant headwinds for riskier assets, particularly global equities. On Tuesday, the Asian Development Bank lowered its growth forecast for China to 6.8 per cent for 2015.

Overnight on Wall Street, the Dow Jones industrial average fell 1.09 per cent, the S&P 500 lost 1.23 per cent, and the Nasdaq Composite fell 1.5 per cent to 4,756.72.

Losses in equities prompted investors to plough funds into fixed income assets. The benchmark two-year US Treasury yield fell to 0.67 per cent, nearing a two-week low.

The spread between the 10-year bond and the 2-year bond has narrowed to 146 basis points from 176 basis points in early July, indicating markets were expecting sub-par economic growth.

Risk aversion was particularly evident in the currency complex with the relatively higher-yielding Australian dollar wallowing at more than one-week lows.

In currencies, the US dollar consolidated most of its overnight gains in early Asian trade. It held firm at 96.439 against a basket of six currencies, after earlier rising 1 per cent. The Japanese yen held firm against the dollar at 120.24 as investors shied away from adding risky bets.

US crude futures rose 0.5 per cent to $46.57 per barrel, while Brent futures were 0.3 per cent firmer at $49.22.

In its biggest one-day drop in more than two months, copper sank to three-week lows as fund and speculative selling pushed prices through sell stops, accelerating the pace of declines.

A 19-commodity Thomson Reuters/Core Commodity CRB Index languishing at two-week lows.

Broader risk aversion failed to lift demand for precious metals with both spot gold and silver nursing big overnight losses. – Reuters