Japan's stock market went on another wild ride on Monday as the benchmark Nikkei index tumbled as much as 4 percent before paring losses in a third day of volatile trade.
Losses were underpinned by uncertainty in the Japanese government bond (JGB) market, where yields on the benchmark 10-year note last traded at 0.83 percent after spiking to 1 percent last week, their highest level in a year.
"We think it's time to be really cautious and possibly get short. At around 16,000 on the Nikkei, you've priced in a huge amount of whatever recovery might come but that's happened in such a short period of time that the real economy hasn't had time to catch up with monetary measures," said Kingsley Jones, Founder and CIO at Jevons Global.
"Last week was really a warning shot that money in the Nikkei is not in there for the long haul. It's ready to come out at the first sign of trouble," he added.
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The rest of Asian stock markets were mixed. Australia's S&P ASX 200 pared losses from an earlier one-month low, the Shanghai Composite was steady and South Korea's Kospi bucked regional weakness to add 0.3 percent.
Financial markets in the U.S. will be shut on Monday for the Memorial Day holiday.