Asian equity markets retreated on Tuesday following a negative lead from Wall Street and caution over when the Federal Reserve might reduce its stimulus program.
Pessimistic comments from activist investor Carl Icahn weighed on U.S. shares overnight after he said that he is "very cautious" on equities. Speaking at a Reuters investment summit, Icahn said he could see a big drop in markets because earnings at many companies are fueled by low borrowing costs rather than management strength.
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Investors digest Fed speak
Remarks from New York Fed President William Dudley also weighed on sentiment. Dudley was optimistic on the economic recovery, which is usually taken as a sign that the U.S. central bank could scale back its bond-buying program soon. However, he also added that stimulus would remain in place for a considerable amount of time.
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"That is market double speak at its best; it is open ended and easily interpreted as either positive for QE or negative for QE, yet gives no signs as to when and how the program will be unwound or what size the Fed is happy to close at," said Evan Lucas, market strategist at IG
Nikkei slips 0.2%
Japanese shares retreated further from the previous day's six-month high as financials fell on profit-taking. Sumitomo Mitsui Financial, Shinsei and Resona eased over 1 percent each.
A stronger currency also hurt some exporters after dollar-yen fell below the 100 handle. Construction equipment maker Komatsu fell 2.5 percent while consumer electronics giant Sharp eased 1.7 percent.
Details of a new government-led stimulus package were unable to lift sentiment. Economics minister Akira Amari announced that spending for the package will likely be around $50 billion and will be compiled early next month.
Kospi up 1%
South Korean shares extended their winning streak into a fourth straight session, closing at a three-week high thanks to renewed foreign buying of large caps.
Samsung Electronics added 1 percent while while Hyundai Motor added nearly 2 percent and Kia Motors ended 2.6 percent higher.
Shanghai 0.2% lower
Mainland shares took a breather after climbing to their highest level in nearly a month on Monday following the release of Beijing's reform agenda. The benchmark Shanghai Composite has gained over 5 percent in the past three sessions.
Financials were the worst performers with China Merchants and Merchants Bank down over 2 percent each.
Real estate developers declined after the city of Guangzhou said it would tighten property market controls and boost land supply. Shanghai Shimao slipped 2 percent and Vanke lost over 1 percent.
Sydney 0.6% lower
Australia's benchmark declined for a second session due to continued weakness in financials. Westpac and Macquarie led losses by 1 percent each.
Optimistic comments from minutes of the Reserve Bank of Australia's latest policy meeting helped to cap larger losses. The central bank said that past interest rate cuts were working to stimulate the economy and left the door open to future easing.
Commonwealth Property Office Fund climbed 5 percent after receiving a $2.8 billion takeover bid from property investor GMT Group.
Amid emerging markets, the Philippines benchmark index closed down 1.2 percent.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC