Nikkei slips 0.7%
Japan's benchmark index closed at a session low as a stronger yen continued to hurt sentiment. The currency hovered around the 98 handle against the greenback, well off lows hit around 100.60 earlier this month.
Tokyo Electron shares closed up 13.2 percent following news of a $9 billion deal with Applied Materials (AMAT). The deal is the largest since Citigroup's purchase of Japan's Nikko Cordial in 2007 and comes at a time when the Japanese government is trying to lure more foreign investment.
(Read more: AMAT, Tokyo Electron deal a vote of confidence in Japan?)
Speaking to CNBC, AMAT CEO Mike Splinter said "we think we'll gain at least 3 points in market share by putting our companies together and being able to help customers solve their high value problems faster and at lower cost. We should be able to improve our performance in the supply chain and save money."
Large-cap industrial exporters dragged on the index with construction equipment maker Komatsu and battery maker GS Yuasa lower by over 2 percent each.
Shanghai reverses gains
China's benchmark index staged a turnaround in afternoon trade to enter negative territory, closing just above sessions lows. But sentiment among investors remained upbeat after the official Xinhua news agency reported that the Shanghai free trade zone will be opened on Sunday.
Stocks expected to benefit from the project extended their rally. Shanghai Lujiazui Finance surged 10 percent while Shanghai Material Trading rose 4 percent.
Agricultural stocks rallied after wheat prices hit a record high due to dwindling supply, which could lead Beijing to increase the price it pays for national stockpiles. Huilong Agriculture surged 10 percent while Hainan Rubber jumped 7.5 percent.