TOKYO (Oct 16): A sharp slide in Japanese stocks led Asian equities down on Thursday, as a maelstrom of concern about global growth drove U.S. Treasury yields lower and weighed on the dollar.

Data released on Wednesday showed U.S. retail sales and producer prices both dropped last month, a worrisome economic signal that helped fuel a sell-off on Wall Street as it quashed expectations the U.S. Federal Reserve would hike U.S. interest rates sooner rather than later.

The New York Fed's Empire State general business conditions index also plunged to 6.17 in October from September's 27.54, marking the weakest pace of manufacturing activity in New York state since April.

The downbeat U.S. data came after a recent spate of weak figures from China and Europe raised fears about the health of the global economy.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 percent in early trade while Japan's Nikkei stock average tumbled 1.8 percent.

The S&P 500 fell as much as 3 percent on Wednesday, briefly turning negative for the year, while European equities shed 3.2 percent to mark their biggest one-day slide in almost four years.

"Investor risk preference appeared to vanish overnight with large-scale loss-cutting worldwide. In the absence of market depth, wild prices fluctuations could continue for some time with volatility itself having a further negative influence on risk assets," strategists at Barclays wrote in a note to clients.

The grim mood sparked a safe-haven rally in U.S. Treasuries and pushed the yield on the benchmark 10-year note < US10YT=RR> as low as 1.865 percent, its deepest nadir since May 2013. It last stood at 2.128 percent in Asian trade.

Only a month ago, fed funds futures had suggested traders priced in almost a 50 percent chance of a Fed rate increase as early as June 2015. But a jump in short-term U.S. interest rates futures on Wednesday implied traders anticipate the U.S. central bank would not move away from its near zero rate stance until the end of the first quarter in 2016.

The dollar's index against a basket of six major currencies stood at 84.903 in early Asian trade, wallowing at levels last plumbed in September and moving away from a four-year high of 86.746 touched early this month.

Against the yen, the dollar sank to 105.99 yen, moving back toward a more than one-month low around 105.20 touched on Wednesday, while the euro was slightly down on the day at $1.2821 after touching a nearly one-month high of $1.2835.

The dollar's sharp fall overnight lent modest support to oil prices overnight, with U.S. crude futures ending just 6 cents lower at $81.78. But the contract was down more than 1 percent in Asian trade, at $80.64.

Spot gold was steady at $1,240.21 an ounce after marking a one-month high of $1,249.30 on Wednesday.