Asian share markets turned tail on Wednesday as fears over instability in the European Union returned with a vengeance, sending the pound to three-decade lows and hammering risk assets of all stripes.

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Concerns about the impact on already fragile global growth spread to commodity markets where oil prices were buckling having shed 5 % on Tuesday. Brent crude futures were down at $47.90, with U.S. crude at $46.50.

Spooked investors rushed into the arms of safe-haven sovereign debt and took markets deeper into unknown territory.

Yields on U.S. Treasuries, the benchmark for bonds worldwide, hit record lows out to 30 years. Investors had to pay Japan 0.27 % to lend it money for 10 years.

"There`s no inflation prospects, there`s no strong growth. The only thing we have is uncertainty," said Hiroko Iwaki, senior bond strategist at Mizuho Securities.

The sudden mood swing saw Japan`s Nikkei skid 3 %, while MSCI`s broadest index of Asia-Pacific shares outside Japan fell 1.6 %.

Since Britain`s shock vote to exit the EU two weeks ago, investors have been consoling themselves with the expectation of yet more policy easing from the major central banks.

Yet analysts, and many at the banks themselves, have warned that the scope for manoeuvre was strictly limited and any new steps could prove counter-productive.

"Financial markets appear to have taken a more realistic view around the complexity and uncertainty characterising the global political background and its impact on already lacklustre economic growth," wrote analysts at ANZ in a note.

"This suggests the tug-a-war between more central bank support and economic fundamentals is going to increase, driving market volatility." 

Sterling sinks, Gold buoyant

The pound was again a major casualty sinking under psychological support at $1.3000 to reach $1.2927 in fast-moving trade. That was its lowest since 1985 when it got down as deep as $1.2565 - a level that could be revisited soon.

Against the yen, it fell below 131.00 for the first time since late 2012, while the euro scored a 2-1/2 year high of 85.30 pence.

The Japanese yen benefited broadly as a traditional safe harbour and climbed to 100.94 per U.S. dollar. Likewise, spot gold hit its highest since early 2014 at $1,370.60.

Dealers said there was no one event behind the manic moves, but rather an accumulation of negative factors.

Three British commercial property funds worth about 10 billion pounds suspended trading as asset prices plunged, while the Bank of England had to take action to ensure local banks kept lending. 

Across the channel, shares in Italy`s banks tumbled, shaking the financial foundations of the euro zone`s third-largest economy.

"Italy faces a severe crisis that is exponential. This is not gradual and not linear," said Francesco Galietti, head of the Policy Sonar risk consultancy and a former finance ministry official. "The immediate trigger is the banking crisis."