Due to fears that escalating tensions in Libya would spread in the Middle East and disrupt fuel supplies, oil vaulted over $116 per barrel on Wednesday.

Investors out of stocks into relatively opted for safe assets such as gold and government bonds after Brent crude experienced a 15 percent jump in less than two weeks, fueling worries about a stifling impact on the economic recovery.

Shares in Tokyo and Hong Kong tumbled more than 1 percent following slide of the Wall Street overnight as the CBOE Volatility Index VIX jumped sharply.

Yahoo Japan was the notable outperformer with shares surging by 4.3 percent to 32,500 yen after sources said Yahoo Inc is in advanced talks for winding down its joint venture in Japan with Softbank Corp.

Lee Sun-yeb, a market analyst at Shinhan Investment Corp, said "The market is volatile as oil's persisting gains and civil unrest in the Middle East is negatively affecting investor sentiment," and "But as long as we do not see the turmoil spreading to other countries within the region, current volatility will be contained and will eventually recover."

The broader MSCI index of Asia ex-Japan stocks was down more than 1 percent and gold held just below a record high of $1,434 an ounce while spot silver hit a 31-year high. The euro dipped slightly after failing to break through a key resistance level in the currency market. US treasuries paused after recent hefty gains with ten-year yields stabilizing at 3.40 percent, well below a peak of 3.74 percent hit last month.