Asian stocks fell on Wednesday on growing concerns about the health of the world's banks, particularly in Europe, pushing investors into safer assets such as the yen, which stood near a 15-month high versus the dollar.

Spreadbetters expected the pessimism to carry over into Europe, forecasting a slightly lower open for Britain's FTSE , Germany's DAX and France's CAC.

S&P 500 e-mini futures fell 0.4 percent, suggesting another weak start on Wall Street.

Japan's Nikkei, which tumbled more than 5 percent Tuesday, suffered another bruising session and slid to a 16-month low.

The Nikkei was last down 4 percent with falling bank shares and a stronger yen continuing to take a toll on sentiment.

The adoption of negative interest rates by the Bank of Japan has provided no support, and the index has dropped more than 10 percent since the central bank's surprise easing on Jan. 29.

Australian stocks touched a 2-1/2-year trough and MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent. The Chinese markets are closed this week for the Lunar New Year holidays.

Equity markets were struck early in the week by worries about the health of the euro zone banking sector, with very accommodative monetary policy seen crimping bank profits and their ability to repay debt.

Trouble for equities has meant a boon for sovereign debt, with the Japanese government bond 10-year yield dropping into the negative for the first time on Tuesday before pulling back to 0.010 percent.

The U.S. Treasury benchmark yield stood near a one-year trough and the 10-year German bund yield was at its lowest in 10 months.

The yen and Swiss franc, often sought in times of financial market turmoil, have also received strong boosts this week.

The dollar traded at 114.60 yen after sinking to a 15-month low of 114.205 overnight. The greenback traded close to 0.9695 franc, a four-month low touched on Tuesday.

"Concerns about European banks are contributing to the risk off mood in markets. In addition, U.S. data this month has been weak and Fed officials appear to be toning down on rate hikes," said Shinichiro Kadota, chief FX strategist at Barclays in Japan.

The euro was flat at $1.1287 after scaling a four-month high of $1.1338 overnight on the dollar's broader weakness.

After a tumultuous start to the week, markets looked to Federal Reserve Chair Janet Yellen's congressional testimony later in the session for fresh cues on the policy outlook, which may provide some relief for markets.

While Yellen is expected to defend the Fed's first rate hike in a decade last year and likely insist that further increases remain on track, any signs of a departure from such a stance in the wake of global growth concerns could provide risk assets with a breather.

"The narrative that she faces is that the U.S. economy and asset markets are being sucked into the downdraft caused by oil, China, emerging markets, reserve manager and sovereign wealth fund asset selling, commodities, currency war, the strong dollar, weak European banks, weak Japanese banks, weak US banks and policy ineffectiveness...to name a few," wrote Steven Englander, global head of FX strategy at Citi.

In commodities, crude oil prices trimmed some of their sharp losses suffered overnight. U.S. crude was up 2.1 percent at $28.53 a barrel. Crude sank nearly 6 percent on Tuesday after weak demand forecasts from the U.S. government and a rout in equities pressured prices.

Spot gold fetched $1,191.36 an ounce, within reach of a 7-1/2-month peak of $1,200.60 struck on Monday on the back of risk aversion in the wider markets.