The MSCI's ex-Japan Asia-Pacific index fell 2 percent as the recent development was seen as a blow to US-China relations, deepening scepticism about a potential resolution to a long-running trade war as both parties enter a crucial 90-day truce period.

Investor sentiment was dented further by rising worries of an economic slowdown and a possible rise in US interest rates after the benchmark US treasury 10-year yield hit a three-month low on Wednesday.

"While the global economy is on a gradual slowdown rather than an uncontrolled spiral, the path is on a knife's edge amid US-China trade tensions (notwithstanding a temporary truce), tightening policy and geo-political risks kicking up volatility and uncertainty," said Vishnu Varathan, head, economics and strategy, at Mizuho Bank.

The Singapore index fell 1.3 percent, led by technology stocks.

Singapore Press Holdings Ltd dropped 4.2 percent, while Singapore Technologies Engineering Ltd dipped 2 percent.

Philippine stocks fell 1.3 percent with real estate and financials leading the losses.

SM Prime Holdings Inc dipped 3.5 percent, while Ayala Corp dropped 2.7 percent.

Meanwhile, a dip in oil prices on the backdrop of an OPEC meeting sent Thai stocks 1.1 percent lower.

Oil prices fell on Thursday as stock markets slid and as traders eyed a meeting of the oil bloc expected to result in a supply cut aimed at draining a glut that has pulled down crude prices by 30 percent since October.

Index heavyweights PTT PCL and Airports of Thailand PCL were the top drags on the index, shedding 2.4 percent and 1.5 percent, respectively.

Indonesia and Malaysia lost 0.3 percent each.