Asian stocks closed lower on Monday as investors booked profits from a New Year rally that had pushed markets to multi-month highs, but financial stocks gained after global regulators decided to relax draft plans for tough new bank liquidity rules.
The start of the fourth-quarter U.S. earnings season could help determine the mood for global equity markets, with aluminum producer Alcoa unofficially kicking off earnings after the market close on Tuesday.
Investors will also be watching policy meetings by the European Central Bank and the Bank of England this week to see if either central bank will modify their benchmark interest rates.
The FTSE CNBC Asia 100 index edged down 0.08 percent.
Japan's benchmark Nikkei average fell, snapping a five-session winning streak as a pause in the yen's weakness triggered profit-taking on exporters, while utility shares lost ground on brokerage downgrades.
The benchmark index declined 0.8 percent to 10,599 points while the broader Topix also lost 0.8 percent.
Exporters succumbed to profit-taking, with Toyota Motor shedding 1.8 percent, Honda Motor falling 1.2 percent and Canon dropping 2.6 percent.
Aozora Bank fell as much as 13 percent, hitting a two-month low, after reports that U.S. buyout firm Cerberus Capital Management is planning to sell most of its stake in the bank.
Fast Retailing jumped 2.7 percent after sales at its Uniqlo clothing chain rose 4.5 percent in December from a year earlier due to solid sales of winter clothing.
Utility stocks tumbled, becoming the worst sectoral performer after Nomura Securities cut its ratings on some power utility companies. Kansai Electric Power tumbled 4.1 percent while Kyushu Electric Power fell 2.9 percent.
South Korean shares closed nearly flat in a choppy, mixed session as investors took sector-driven bets before the onset of the fourth-quarter corporate earnings reports season.
The Korea Composite Stock Price Index (KOSPI) closed flat at 2,011.2 points.
Tech shares pared earlier losses but still closed down, with market heavyweight Samsung Electronics falling 0.3 percent ahead of its fourth earnings estimate to be announced on early Tuesday.
Energy & chemical shares lost ground, after increased energy use from unusually cold local weather. South Korea's largest oil refiner SK Innovation dipped 1.9 percent.
But auto shares rose after falling 6.5 percent during the previous week as the weakening yen was expected to benefit Japanese competitors, with Hyundai Motor climbing 1.2 percent.
Hong Kong shares held their ground in brisk trading to end just below a 19-month high set last week, with strength in Chinese property and resources sectors outweighing weakness in defensive counters such as China Mobile.
The Hang Seng Index closed flat at 23,329.8, near the 19-month high set last Thursday. The China Enterprises Index ended up 0.3 percent at 11,973.1. Both were also near their most overbought levels since late 2010.
Chinese property counters extended their strong start to the new year, with some of the higher beta names seeing bigger percentage gains on the day after Shimao Property became the latest to tap the debt market.
Chinese railway counters and other mass transportation counters rose after the State Council pledged to boost the development of environmentally friendly urban transport systems. China Railway Group rose 2.8 percent.
China shares climbed to their highest close since June, helped by strength in mass transportation counters after the State Council pledged to boost the development of environmentally friendly urban transport systems.
The CSI300 Index of the top Shanghai and Shenzhen listings ended up 0.5 percent at 2,536 points, its highest closing level since June 21, 2012. The Shanghai Composite Index climbed 0.4 percent.
Chinese coal producers rose on hopes increased mainland demand will boost margins as temperatures in China plunged to their lowest in almost three decades. Yanzhou Coal Mining rose 2.3 percent while China Resources Power dipped 3.1 percent.
Chinese property stocks were key under performers. Poly Real Estate fell 1.6 percent in Shanghai but China Resources Land jumped 3.2 percent.
Australian shares slipped 0.1 percent, paring early gains to trade flat as investors consolidated a recent rally on U.S. data showing a steady pace of jobs growth and brisk expansion in the services sector.
The benchmark S&P/ASX 200 index was 6.5 points lower at 4,717.3. It fell 16.9 points on Friday after reaching 19-month highs earlier in the week.
Major banks ended the day moderately higher with Australia New Zealand Banking Group leading gains, up 0.6 percent. The Commonwealth Bank of Australia bucked the trend, dropping 1 percent after hitting an all-time high of A$63.70 during morning trade.
Mining magnate BHP Billiton was down 0.3 percent. Rival iron ore miner Rio Tinto plumbed 1.7 percent after it announced it is considering the suspension of operations in the Northern Territory after talks with the government over power supplies to the plant broke down last month.
Lynas jumped 14.4 percent after it said it expects to produce commercial rare earth products in the next few months from its controversial plant in Malaysia after commissioning the plant's cracking and leaching units.
New Zealand's benchmark NZX 50 index closed up 0.2 percent at 4,084.8 points.
India's BSE Index finished 0.6 percent lower while the 50-share NSE Index closed down 0.5 percent.