Asian shares fell on Wednesday as investors took profits for a second straight session on concerns that the region's recent rally may be headed for a correction.
The FTSE CNBC Asia 100 index tracks Asia-Pacific's 100 largest companies and has been enjoying a two-week winning streak, having peaked at a two-year high on Tuesday.
Meanwhile, the Nikkei and Australia's benchmark moved away from Tuesday's multi-year highs, while South Korea's Kospi snapped a two-day fall. Hong Kong shares dived 1.4 percent and the Shanghai market posted a fifth-straight daily loss.
Experts say the slight pullback in the market's recent rally is simply nothing more than a pause. "Fatigue was allowed to set in by the absence of any meat and potatoes – hard global economic news that moves markets. But the bull run still looks like it has plenty of legs," said Jason Hughes of IG Markets in a note.
A pause in the yen's downward trend weighed on the Nikkei as the currency traded around the 95.70 levels, well-off Tuesday's three-and-a-half year low of 96.70.
Exporters were sold off due to the yen's slight strengthening with both Canon and Panasonic shares down 2.8 percent.
Losses were limited by expectations of aggressive monetary easing when a new Bank of Japan governor takes over next month. News that Japan's main opposition Democratic Party has decided to back Haruhiko Kuroda, a long-time advocate of money printing and the government's nominee for the central bank's top post, cemented investor expectations that radical stimulus is coming soon.
Oz Banks Weigh
In Sydney, weakness in the financial sector led markets to close below the 5,100-level. Both UBS and Deutsche Bank declared the Australian banking sector was overpriced early Wednesday, and these comments hurt domestic lenders.
Both Westpac and Australia New Zealand Banking fell 2 percent. Australia's largest bank by assets, National Australia Bank, slumped 1.8 percent after announcing that it was restructuring its operating model in an effort to trim costs.
(Read More: Watch Out! Reversal of the 'Great Rotation' Coming)
Geoff Wilson, Portfolio Manager at Wilson Asset Management told CNBC that he believes Sydney shares are in the early stages of a bull market. "If you look at the most recent period of the Australian bear market, such as the 1990s, the index in the next 15-16 months rallied 60 percent. If we repeat what has happened historically, we're only halfway through this rally."
The S&P ASX 200 has advanced 22 percent since March 2012.
Hong Kong Slips
Weak corporate earnings weighed on Hong Kong markets. The Hang Seng Index closed just 10 points shy from February's twelve-week low of 22,445 points.
Shares of Cathay Pacific slipped 0.4 percent after the world's largest international air cargo carrier reported an 83 percent plunge in full-year net profit. Meanwhile, noodle restaurant chain operator Ajisen reported a 56 percent slide in net profit but shares ignored the news to surge over 16 percent.
(Read More: Can a Pawn Shop Revive Hong Kong's IPO Market?)
Seoul's benchmark managed to eke out a gain of 0.3 percent after the yen strengthened, which encouraged buying in domestic exporters. However, investors refrained from big moves ahead of a central bank decision on Thursday.
According to a poll of 132 traders conducted by the Korea Financial Investment Association, 46 percent of respondents predicted a rate cut at Thursday's meeting of the Bank of Korea's policy committee.
Samsung Electronics rallied over 2 percent while LG Electronics gained 1.9 percent.
David Gaud, senior portfolio manager at Edmond de Rothschild Asset Management told CNBC's "Asia Squawk Box" that he believes Asian markets need improvement in structural fundamentals in order to push higher.
"We don't see corporates delivering better earnings, we don't see momentum picking up and we don't see margins rebounding. We're struggling to see any real improvement," he said.