"All of Asia has had such huge gains, so we had to have a correction sooner or later, " said Shane Oliver, head of investment strategy at AMP Capital in Sydney.

WSJ: Nikkei Drops 7.3%

"The feeling is that the euro crisis could be back and that you could see full on contagion, that is why you're seeing the market reaction today, " said Shane Oliver, head of investment strategy and chief economist at AMP Capital in Sydney.

WSJ: Asian Shares Fall Amid Cyprus Bailout Concerns