TOKYO/HONG KONG -- Asian shares dropped sharply on Thursday following news of the arrest of Huawei Technologies CFO Meng Wanzhou.
Meng was detained in Canada on Dec. 1 for allegedly violating U.S. sanctions against Iran.
Concerns over a further escalation in tensions between Washington and Beijing prompted investors to dump stocks, pushing down major indexes across Asia.
Hong Kong suffered the steepest fall, with the Hang Seng Index dropping more than 2% from the previous day. Stocks with links to the Chinese telecommunications supplier were hit particularly hard.
Huawei rival ZTE, which has had its own issues with U.S. authorities over dealings with Iran, was down close to 6%. Shares also fell more than 5% in Shenzhen.
Japan's Nikkei Stock Average at one point fell nearly 3%, with shares of electronic parts makers TDK, Murata Manufacturing and Alps Electric falling between 4% and 6%. Chipmakers Tokyo Electron and Advantest, as well as companies with operations in China, such as construction machinery maker Komatsu, also dropped sharply.
SoftBank Group, which is working with Huawei on robotic applications for 5G technology, also fell close to 5%.
The Nikkei Stock Average closed down 2% at 21,501, its lowest point in more than a month.
"The trade issue between China and the U.S. is deep-rooted, and will likely continue to affect China-related shares," said Yoshinori Ogawa, senior strategist at Okasan Securities. "With such high volatility, investors are unable to fully inject their money into shares," he added.
Elsewhere in Asia, South Korea's benchmark Kospi Index and Singapore's Straits Times Index fell more than 1%, while Taiwan's Taiex slipped more than 2%.
China's Shanghai Stock Exchange Composite Index fell nearly 2%. Increased fears over trade tensions have led to renewed concern regarding China's economic slowdown, weakening investor sentiment.
U.S. stock futures slipped on Wednesday evening after news of the arrest emerged. S&P 500 futures fell nearly 2% at one point, while futures for the Dow Jones Industrial Average and the Nasdaq 100 also dropped.
Zach Coleman, Nikkei Asian Review Deputy Editor in Hong Kong, contributed to this article.