The Nikkei 225 fell 2.74%, while the Shanghai Composite dropped 3.94% and theS&P/ASX 200 eased 0.28%.
The move followed a weekend storming of the Saudi embassy in Tehran in response to the kingdom's execution of a prominent Shiite cleric.
The announcement to cut diplomatic ties was sent in an Arabic-language Twitter (N:TWTR) post by the Saudi Ministry of Foreign Affairs. "His excellency, Foreign Minister Adel al-Jubeir (of the) Saudi kingdom is announcing cutting diplomatic ties with Iran."
China's Caixin manufacturing index for December fell to 48.2, well below a forecast of 49 and less than the 48.6 previously. Japan said its manufacturing index for December came in at 52.6, up from 52.5.
In Australia, the AIG manufacturing index came in at 51.9, in expansion, but down from 52.5 previously.
In the week ahead, investors will be looking ahead to Friday’s U.S. jobs report for December, as well as reports on U.S. manufacturing and service sector activity. Tuesday’s euro zone inflation report will also be in focus.
On Monday, in the euro zone, Germany is to release preliminary data on consumer inflation.
The U.K. is to release survey data on manufacturing sector activity.
In the U.S., the Institute of Supply Management is to release data on manufacturing activity
Global stock markets were mostly lower on Thursday, the last day of 2015, as investors continued to track oil prices.Last modified on Tuesday, 02 February 2016