Updated from 12:43 a.m. EST

Asian stocks closed lower Thursday with shares in Japan hitting a two-week low as the U.S. government scrapped its plan to buy up toxic assets, and companies slashed sales and earnings forecasts.

Japan's Nikkei 225 stock average closed down 5.3% to 8238.64, its worst close since Oct. 29. The Hang Seng index in Hong Kong declined 5.2%, while the S&P/ASX 200 index in Australia finished lower by 5.9%. Bucking the trend, the Shanghai composite in China rose 3.7%.

A stronger yen hurt the shares of exporters such as Sony ( SNE - Get Report) and Panasonic ( PC). Technology stocks also traded to the downside after Intel ( INTC - Get Report) on Wednesday sharply reduced its fourth-quarter sales expectations, citing "significantly" weaker-than-expected demand in all regions and across all product types.

Shares in Europe were mixed. The FTSE 100 index in London fell 0.5%, while the DAX in Frankfurt rose 0.1%.

BT Group ( BT), Britain's largest phone company, said it plans to cut 10,000 jobs this year to boost profitability after revealing a decline in second-quarter earnings. German engineering company Siemens ( SI) reported a wider fourth-quarter loss.

Meanwhile, the German economy, Europe's biggest, tipped into recession in the third quarter, shrinking as exports declined, government figures showed Thursday.

On Wednesday, U.S. Treasury Secretary Henry Paulson said the government's $700 billion financial rescue package won't buy troubled assets from banks as originally planned, but will buy stakes in banks and encourage them to resume more normal lending.

Stock futures in the U.S. were mixed Thursday after Wall Street suffered a big hit on Wednesday.

S&P 500 futures rose 4.80 points to 858.30, and were trading 7.60 points above fair value. Nasdaq futures fell 1.50 points to 1162, and were 3.40 points below fair value.

The Dow Jones Industrial Average lost 411.30 points, or 4.7%, to 8331.24, and the S&P 500 gave back 46.65 points, or 5.2%, to 852.30. The Nasdaq slid 81.69 points, or 5.2%, to 1499.21.

Oil fell 99 cents to $55.17 a barrel in electronic trading Thursday on the New York Mercantile Exchange. The price of oil traded around $147 a barrel in July. The Associated Press contributed to this report.