Asian stock markets drop as China devaluation, oil and Fed stoke fears

The Nikkei fell 3% at the opening bell in Tokyo while the continued depreciation of the yuan added to fears that the economy is weaker than expected

Asian stocks have fallen sharply and the Chinese currency hit fresh four-year lows as concern about crude oil prices and an expected US rate rise by the Federal Reserve later this week kept investors on edge.

European markets seemed likely to follow suit after the People's Bank of China on Monday continued guiding the yuan lower, setting official trading midpoint with the US dollar at its weakest since July 2011.

Related: Markets in fragile mood as Federal Reserve prepares to raise interest rates