By Rafael Nam

The tumble came after Royal Bank of Scotland on Monday unveiled the biggest loss in U.K. corporate history, and after Britain launched a second bank rescue plan that failed to restore confidence in the wobbly financial sector.

Sterling dropped to a record low of 127.47 yen against the Japanese currency, according to Reuters data, and to its lowest against the U.S. dollar in almost seven years, as investors switched to currencies seen as safer.

U.S. stock futures fell as Wall Street prepared to re-open after the Martin Luther King Jr holiday on Monday. European shares were set to fall for a second consecutive session.

Regional bonds benefited from the uncertainty, while oil steadied below $35 a barrel. Crude dropped on Monday after Russia and Ukraine signed a gas deal that secures supplies to Europe.

"The market is refocusing on the bigger global picture," said Justin Gallagher, head of Sydney sales trading at ABN AMRO, pointing as well to expectations for weak corporate earnings results in coming weeks.

"Clearly the market today continues to factor in more disappointment and certainly, despite the inauguration of Obama ... the market is looking past that now and realizing just how big a mess the global economy is in," he said.

The MSCI index for Asia-Pacific stocks outside Japan slid 2.9 percent as of 0315 GMT (10:15 p.m. EST Monday) , after earlier coming within 0.01 point of matching the 2009 low hit last week.

The index is down more than 8 percent so far this year, after it fell in 2008 by 53 percent -- its biggest decline on record. Still, Asian shares are up about 16 percent since hitting five-year lows in late November, having since outperformed an MSCI index of global stocks and the S&P 500 index.

Asian banking shares from HSBC to Japanese lender Mizuho Financial Group were among the leading decliners in the region as worries intensify about a sector facing more credit and loan-related writedowns.

Japan's Nikkei fell 2.3 percent, while Australian shares dropped 3.1 percent.

Other major Asian indexes, including in Hong Kong, South Korea and Taiwan, fell 1-2 percent each.

U.S. stock futures slid, with March S&P 500 futures down 8.5 points, or 1 percent after earlier falling more than 1.5 percent. Dow Jones futures fell 0.8 percent.

Governments worldwide are grappling with how to get their banks lending again to revive economies, despite already injecting billions of dollars and implementing other measures such as backing some of their debt.

Central banks have also cut interest rates sharply in a bid to spark growth, but even that has failed to comfort investors.

RATING DOWNGRADES

Obama will be inaugurated as U.S. president later in the day, and his administration is expected to quickly roll out a hefty stimulus package and a revived plan to buy bad bank assets.

European governments are passing spending measures of their own, but the ensuing impact on their budget deficits are leading some credit agencies to cut sovereign ratings.

Spain on Monday became the second euro zone country after Greece to have its credit rating downgraded by Standard & Poor's in less than a week.

"People falsely were hoping these stimulus plan announcements were going to fix everything," said Angus Gluskie, a portfolio manager at White Funds Management in Australia.

"But they've been faced squarely with an increasing number of fundamental pieces of economic evidence over the last week or so which has just proved to them that that's not the case."

Spain's downgrade, combined with worries about the financial sector, sent the euro lower. The currency fell 0.4 percent from late trade on Monday to $1.3018 and earlier hit a six-week low of $1.2988 on trading platform EBS.

The pound extended its losses on Tuesday to slide to as low as $1.4132 against the dollar, its weakest since March 2002.

The flare up in risk aversion benefited assets seen as safer in volatile times. The dollar index, a gauge of the greenback's performance against a basket of six major currencies, gained 0.4 percent to 85.511.

Regional bonds also benefited from investor caution. March 10-year Japanese government bond futures rose 0.29 point to 139.83, near a four-month high of 140.19 hit last week.

(Additional reporting by Mette Fraende in SYDNEY; Editing by Lincoln Feast)