Asian markets tumbled in early trade on Monday and the yen climbed as eurozone’s fears returned on news that Cyprus was planning to tax bank depositors as part of a controversial bailout.

Wall Street also provided a weak lead, with the Dow seeing its first loss after a 10-day rally as data pointed to ongoing softness in the US economy.

Tokyo fell 2.10 per cent by the break, Hong Kong lost 2.14 per cent, Shanghai shed 0.62 per cent, Sydney slipped 1.43 per cent and Seoul was 0.49 per cent lower.

Investors have been spooked by news Cyprus' government agreed to a levy of nearly 10 per cent on Cypriots as part of a deal with fellow eurozone countries and international creditors in order to qualify for a $13 billion bailout.

Deposits of more than 100,000 euros ($129,000) will be hit with a 9.9 per cent charge and 6.75 per cent for anything below that threshold.

The proposal still needs to be passed by parliament.

President Nicos Anastasiades said in a televised address Sunday the tax was the "least painful" option for the recession-hit island and vowed to try to persuade the eurogroup to "limit the impact on small depositors".

While bank customers have voiced dismay and anger at the plan, global markets were jolted amid fears it could reignite the eurozone debt crisis and hit confidence in other troubled countries such as Spain and Italy.

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

"But I suspect that we are going to hear reassurances from other countries that Cyprus is different and that this plan will not be put in place elsewhere," he told Dow Jones Newswires.

On currency markets the euro fell to $1.2902 and 122.20 yen in early Asian trade from $1.3075 and 124.61 yen in New York on Friday.

The dollar dropped to 94.70 yen from 95.26 yen, although it received some measure of support from expectations that the new leaders of the Bank of Japan will unveil a fresh round of monetary easing to jumpstart the economy.

On Wall Street the Dow finished down 0.17 per cent, the first time in nine days it did not set a fresh record, while the S&P 500 lost 0.16 per cent after moving within a whisker of its own all-time high. The tech-heavy Nasdaq dropped 0.30 per cent.

Dealers went into sell mode after the University of Michigan Consumer index took a surprising dive to 71.8, its lowest since the end of 2011 and down from 77.6 in February. Analysts had expected a gain.

Oil prices fell, with New York's main contract, light sweet crude for delivery in April dropping $1.24 to $92.21 a barrel and Brent North Sea crude for May delivery shedding $1.26 to $108.56.

Gold was at $1,597.00 an ounce at 0300 GMT compared with $1,592.60 late Friday.