Asian markets started Monday on a negative note as trade tensions returned to the fore, with Donald Trump eyeing fresh tariffs on a swathe of Chinese goods and NAFTA talks with Canada hitting a wall.
The optimism that permeated trading floors at the start of last week has been replaced by a now-familiar sense of dread after the US president hit out at Ottawa over the weekend as the two sides struggle to hammer out a new deal.
In a tweet over the weekend, Trump threatened to exclude Canada from a new North American Free Trade Agreement after negotiations to rewrite the 1994 pact ended without agreement Friday.
He said there was "no political necessity to keep Canada in the new NAFTA deal. If we don't make a fair deal for the US after decades of abuse, Canada will be out".
While talks will resume Wednesday, his outburst seemed designed to ramp up pressure on Canadian negotiators.
The comments threw a spanner in the works for investors after the US and Mexico said earlier in the week they had agreed a revised pact.
Trump also roiled markets last week by saying he wanted to impose tariffs on $200 billion of Chinese imports as soon as public consultation ends on Thursday, adding to the $50 billion already targeted.
That rekindled fears of an all-out trade war between the world's top two economies, while European Commission chief Jean-Claude Juncker on Friday warned the EU would retaliate in kind if Trump pushes through duties on foreign cars.
The end of the month sees the Federal Reserve's next policy meeting at which it is expected to lift interest rates for a third time this year, with analysts poring over its statement for an idea about a possible fourth rise before January.
'Looking for exits'
"Batten down the hatches as the main feature that stands out about this week -- and the month of September for that matter -- is (that) the market risk is massive as the central bank and the political worlds collide," said Stephen Innes, head of Asia-Pacific trading at OANDA.
"Indeed, such collisions tend to escalate volatility exponentially, and I expect some episodic moments that will have traders looking for the exits or end up over the barrel."
Japan's Nikkei ended 0.7 percent lower, Hong Kong was down 0.8 percent in the afternoon and Shanghai fell 0.2 percent. Singapore lost 0.4 percent, Seoul shed 0.7 percent and Sydney was 0.1 percent off.
There were also losses in Wellington, Taipei, Manila and Jakarta.
In early European trade London rose 0.4 percent but Paris and Frankfurt each fell 0.2 percent.
On currency markets, the Turkish lira continued its downward spiral -- losing more than two percent to 6.68 to the dollar -- having recovered slightly Friday after the government made it more expensive to hold foreign currency savings.
The Indonesian rupiah is also hovering around lows last seen during the Asian financial crisis 20 years ago, hit by a ballooning current account deficit.
Other emerging-market and high-yielding currencies were mixed, with the Australian dollar 0.1 percent up, South Korea's won 0.2 percent higher, the South African rand 0.5 percent lower and the Russian ruble down 0.4 percent.
Key figures around 0720 GMT
Tokyo - Nikkei 225: DOWN 0.7 percent at 22,707.38 (close)
Hong Kong - Hang Seng: DOWN 0.8 percent at 27,678.24
Shanghai - Composite: DOWN 0.2 percent at 2,720.73 (close)
London - FTSE 100: UP 0.4 percent at 7,458.90
Euro/dollar: UP at $1.1610 from $1.1599 at 2100 GMT on Friday
Pound/dollar: DOWN at $1.2912 from $1.2961
Dollar/yen: DOWN at 110.90 yen from 111.02 yen
Oil - West Texas Intermediate: DOWN 17 cents at $69.63 per barrel
Oil - Brent Crude: DOWN 12 cents at $77.52 (new contract)
New York - Dow Jones: DOWN 0.1 percent at 25,964.82 (close).