Elsewhere in Asia, Australia's S&P/ASX 200 index dropped 2.7 percent to 3,994.80. Singapore's benchmark dived 4.9 percent. "I think it's still a matter of people being cautious given they don't really know how wildly these overseas markets will respond," Westpac Banking Corp chief economist Bill Evans told Australian Broadcasting Corp television.

"I would expect people will take the risk off the table at the moment waiting for some more clarity in those two big issues: how will the US respond to the downgrade and will the Europeans settle down these concerns in Europe?" he said.

Seeking to avert panic spreading across financial markets, finance officials from the Group of Seven industrial countries issued a joint statement late Sunday saying they were committed to taking all necessary measures to support financial stability and growth.

The G7 statement came after the group held an emergency conference call to discuss the debt crisis in Europe and market prospects following the announcement of the first-ever downgrade of the US credit rating.

The European Central Bank, meanwhile, said it will "actively implement" a bond-purchase program that could boost Spanish and Italian bonds and drive down interest yields that threaten those countries with financial disaster.

The burst of activity underscored how government debt levels in Europe and the US have unsettled financial markets - and sharpened fears that debt troubles could derail the global recovery from the 2007-2009 financial crisis.

The Dow fell 5.8 percent last week amid dour US economic news. It plunged 513 points on Thursday alone, the worst day for the Dow since the global financial crisis erupted in 2008.

Benchmark oil for September delivery was down $3.06 to $83.84 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 25 cents to settle at $86.88 on Friday.

In London, Brent crude was down $2.91 at $106.46 per barrel on the ICE Futures exchange.

In currencies, the dollar weakened to 77.82 yen from 78.34 yen late Friday in New York. The euro rose to $1.4330 from $1.4265.