Stocks fell and the euro hit a three-week low versus the dollar as worries about Greek and Italian fiscal deficits and a regional election rout for Germany's ruling party cast more doubt on the euro zone's ability to solve its debt crisis.
Data on Friday showing US employment growth halted in August fueled concerns that the world's biggest economy is slipping back into a recession, sending Wall Street sharply lower on Friday before a long weekend.
The euro zone faces a week packed with political and legal risks, beginning with the German Federal Constitutional court ruling on Wednesday on claims that Berlin is breaking German law and European treaties by contributing to bailouts of Greece, Ireland and Portugal.
The yield premiums investors demand to hold Italian and Spanish 10-year government bonds rather than benchmark German Bunds hit their highest in a month.
European stocks fell 2 percent while emerging stocks lost 2.2 percent.
US crude oil fell 1.6 percent to US$85.07 a barrel.
The dollar rose 0.4 percent to set a one-month high against a basket of major currencies.
The euro had fallen to a three-week low of US$1.4111 before trimming losses.
Japan's Nikkei average skidded nearly 2 percent to wipe out last week's gains, hurt by a weaker euro and a US jobs report that raised worries President Barack Obama's job measures will not be enough to prevent another US recession.
The Nikkei ended down 1.9 percent at 8,784.46, erasing last week's 1.7 percent gain made on expectations of more US easing. The broader Topix index fell 1.8 percent to 755.82.
