RECESSION FEARS

Europe's natural safety play, the 10-year German government bond, surged to send its yields tumbling back into negative territory and a new record low.

MSCI's broadest index of Asia-Pacific shares outside Japan slid almost 5 percent, while Shanghai stocks lost 1.1 percent.

Financial markets have been gripped for months by worries about what Brexit, or a British exit from the European Union, would mean for Europe's stability.

"Obviously, there will be a large spill-over effects across all global economies if the "Leave" vote wins. Not only will the UK go into recession, Europe will follow suit," was the gloomy prediction of Matt Sherwood, head of investment strategy at fund manager Perpetual in Sydney.

Investors duly stampeded to sovereign bonds, with US 10-year Treasury futures jumping over 2 points in an extremely rare move for Asian hours.

Yields on the cash note fell 24 basis points to 1.49 percent, the steepest one-day drop since 2009 and the lowest yield since 2012.

The rally did not extend to UK bonds, however, as ratings agency Standard and Poor's has warned it would likely downgrade the country's triple A rating if it left the EU.

Yields on 10-year gilts were indicated up 20 basis points at around 1.57 percent, meaning higher borrowing costs for a UK government already struggling with a large budget deficit. Standard and Poor's has said it will strip the UK of its triple A credit rating.

Across the Atlantic, investors were pricing in even less chance of another hike in US interest rates given the Federal Reserve had cited a British exit from the EU as one reason to be cautious on tightening.

"It adds weight to the camp that the Fed would be on hold. A July (hike) is definitely off the table," Mike Baele, managing director with the private client reserve group at US Bank in Portland, Oregon.

Fed funds futures were even toying with the chance that the next move could be a cut in US rates.

Commodities likewise swung lower as a Brexit would be seen as a major threat to global growth. US crude shed $3.00 to $47.11 a barrel in erratic trade while Brent fell as much as 6 percent to $47.83 before clawing back to $48.18.

Industrial metal copper sank 3 percent but gold galloped more than 6 percent higher thanks to its perceived safe haven status.