Asian equities extended losses as geopolitical tensions over U.S. demands for Greenland and growing fiscal worries in Japan unnerved investors. Major indexes across the region, including Japan's Nikkei and Topix, retreated, though China's CSI 300 bucked the trend with gains amid stimulus hopes.

Japan's market selloff intensified, with 10-year government bond yields hitting a 27-year high. Prime Minister Sanae Takaichi's proposed tax cuts, including a suspension on food sales tax, raised fears over funding a debt load already at 240% of GDP. Robin Brooks, former Goldman Sachs strategist, warned markets would teach a harsh lesson.

Wall Street's overnight weakness provided a poor backdrop, but Asian losses were milder than earlier in the week, attracting some bargain buying. Hyundai Motor surged 10% in Seoul, offsetting broader declines. Investors now await U.S. President Trump's Davos speech and a wave of quarterly earnings reports.