Japan's benchmark index trimmed losses after briefly slipping below the 13,000 level on Wednesday, extending a global sell-off in equities amid disappointment at the Bank of Japan's (BOJ) inaction to calm a volatile government bond market.
The Nikkei index closed down 0.2 percent after tumbling as much as 2 percent earlier in the session, South Korean shares closed at a seven-week low, while Australia's S&P ASX 200 hit a near five-month low.
The risk-off trade also pushed emerging Asian markets lower. Some of Asia's best-performing indices in 2013 like Thailand's SET and Indonesia's Jakarta Composite fell 1 percent each after tanking 5 and 3 percent respectively on Tuesday.
Financial markets in Hong Kong and China are shut for the Dragon Boat holidays and will resume trade Thursday.
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The lack of action by Japan's central bank at a monetary policy meeting on Tuesday set a negative tone for global markets, which have been largely supported by central bank stimulus. Wall Street and European shares closed down 1 percent.
"Riots in Istanbul, central banks raising stop signs, bond yields on the rise and equity markets skidding; brace yourselves, we are in for a very rough ride over the coming weeks," said Evan Lucas, market strategist at IG in a note.
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"All this news has led to one thing and one thing only – high volatility. The current 'correction' in the market is heading towards a confidence killer, and this will only see volatility moving even higher," he added.
Nikkei Down 0.2%
The yen turned weaker in the afternoon session to jump nearly 1 percent against the greenback, approaching the 97 handle. This boosted exporter stocks and helped Japan's benchmark index pare losses.
Electronic equipment maker Oki Electric surged 7 percent while Yokogawa Electric added 4 percent. However, automakers remained under pressure with Suzuki Motors down 4 percent and Isuzu Motors losing 3 percent.
Banks, beneficiaries of the government's reflationary policy, lost ground as investors worried about a rise in long-term interest rates. Aozora Bank, Resona Holdings and Shinsei Bank all fell 3 percent each.
"There's an increasing chance that 'Abenomics' is close to over. With stocks down and the yen appreciating, policymakers need to reflect what they are doing wrong, and they are not doing that so far," said Takuji Okubo, chief economist at Japan Macro Advisors.
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Data showed Japanese machinery orders fell nearly 9 percent in April from the previous month, in a sign that factory activity remains slow as corporations hold off on spending. So far, personal consumption has supported Japan's economic growth and analysts say that in order for inflation to pick up, factory activity and corporate investment needs to increase.
Kospi Slips 0.5%
South Korean exporters were unable to gain from the yen's strength, which boosts their competitive advantage against Japanese rivals, due to fears over global central bank liquidity.
Automaker Hyundai Motor and chip maker LG Display slipped 1.4 percent each while LG Electronics fell 2.5 percent.
Political tensions also undermined losses after North Korea walked away from highly anticipated talks with Seoul. The set-back means any decision to re-open the Kaesong joint industrial park are likely to be delayed for now.
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Sydney Falls 0.7%
Australian resource stocks took a hit following a drop in oil and metals prices. Energy producer Senex tanked 7 percent after Brent crude fell towards $102 a barrel while mining services firm Drillsearch and Transfield fell 6 percent each.
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The S&P ASX 200 has tumbled 10 percent from its five-year peak of 5,249 points on May 15, putting the benchmark index in official correction mode.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter