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 risky assets of all stripes.

A man looks at an electronic board showing the recent exchange rate between Japanese yen against the U.S. dollar and Japan's Nikkei average (R) outside a brokerage in Tokyo, Japan, June 13, 2016.

In frantic trading reminiscent of the fateful Friday after Britain voted to abandon the EU, sterling shed a full U.S. cent in a matter of minutes to crater at $1.2798 GBP=D4.

Perhaps taking advantage of the distraction, Beijing allowed the yuan to fall to the lowest since late 2010 CNY=CFXS and secure a competitive advantage for its exports.

Concerns that central banks might not be able to soften this latest blow to global growth hit commodities hard. Having shed near 5 percent on Tuesday, Brent crude oil LCOc1 fell further to $47.84, with U.S. crude at $46.43 a barrel.

Spooked investors rushed into 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. The 10-year note offered just 1.35 percent US10YT=RR and investors were willing to pay Japan 0.27 percent to lend Japan money for a decade.

"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 .N225 skid 2.5 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.5 percent.

EMini futures for the S&P 500 ESc1 shed 0.5 percent, on top of a 0.7 percent drop on Tuesday. German stocks .GDAXI were seen starting down 1.2 percent, while France .FCHI looked to lose 1.0 percent.

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

Yet analysts, and many at the banks themselves, have warned that the scope for maneuver 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 characterizing the global political background and its impact on already lackluster 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, cracking supports at $1.3000 and $1.2950 to last stand at $1.2888 in fast-moving trade. This was ground not visited since 1985 when it got as far as $1.2565 - depths that could be revisited all too soon.

Against the yen, it fell below 131.00 GBPJPY=R for the first time since late 2012, while the euro scored a 2-1/2 year high around 85.00 pence EURGBP=R.

The Japanese yen benefited broadly as a traditional safe harbor and climbed to 100.90 per U.S. dollar JPY=. Likewise, spot gold XAU= hit its highest since early 2014 at $1,371.40.

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

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."

Source: Reuters