Japan's Nikkei index ended below the key 14,000 level on Wednesday as the yen hit a six-week high against the greenback on uncertainty about when the Federal Reserve could begin tapering its easy-money program.
Fed taper fears
A second consecutive session of losses on Wall Street dampened sentiment in Asia. All three major averages logged their biggest declines since June after comments from Federal Reserve presidents left investors uncertain about when the central bank could begin tapering its easy-money program.
Those concerns saw dollar-yen hit a six-week low at the 97 handle in Asian trade.
(Read more: Fed outlier! No taper before year-end: Strategist)
Atlanta Fed president Dennis Lockhart said the initial taper in the central bank's asset purchase program could start at any of the three remaining Federal Open Market Committee meetings this year while Chicago Fed President Charles Evans agreed that the central bank will likely reduce its stimulus program later this year.
Nikkei tanks 4%
Japanese manufacturers suffered the brunt of the losses with blue-chip heavyweight Fast Retailing down over 6 percent, Softbank and Fanuc losing over 4 percent each and automaker Isuzu Motors declining over 7 percent.
The Bank of Japan (BOJ) begins a two-day policy meeting today with an outcome due on Thursday. While analysts expect no action, the direction of the yen will hinge on the BOJ's policy statement.
"Talk of Japanese investors increasing currency hedges of their recently purchased foreign assets has been a key reason behind the JPY strength, while there are concerns that the pace of monetary velocity (the frequency at which money is spent on goods and services over a period of time) is falling," said Evan Lucas, market strategist at IG in a note.
(Read more: Should Kuroda be more like Draghi?)
In earnings news, audio equipment maker Pioneer slumped nearly 9 percent after lowering its operating profit forecast by 33 percent but air-conditioner maker Daikin rose 3 percent after reporting a 133 percent rise in annual net profit.
The Nikkei index's 14-day relative strength index (RSI) stands at 45.9, which shows that the index is still in a downtrend. A reading above the 50-mark signals an upwards trend.
Sydney down 1.8%
Caution over the start of Australia's corporate earnings season led the benchmark index to hit a two-week low, led by sharp declines in mining stocks.
Australia's High Court deemed a controversial profits tax on iron and coal mines was constitutional, leading to a steep sell-off in resources. Fortescue Metals led losses by 4.5 percent while Atlas Iron and Mount Gibson fell 3 percent each.
Banking stocks also suffered. Macquarie Group skidded 3 percent while the nation's top four lenders fell 2 percent each.
Australian-listed shares of Rupert Murodch's newly separated entertainment unit 21st Century Fox jumped 0.8 percent after reporting a 16 percent annual jump in total revenue for the quarter ending June.
Shanghai 0.7% lower
China's benchmark stock index reversed earlier gains as caution set in ahead of a deluge of economic data. July trade figures are due on Thursday while inflation, retail sales and industrial output data will be released on Friday.
The index hit a three-week high at the 2,068 mark earlier in the session. "The stronger [market] performance is due to policies to stimulate the economy and recent PMI data, which show China's economy is stabilizing," said Jackson Wong, vice president at financial services firm Tanrich Securities.
(Read more: China tourism set for boom like Japan in the 80s)
Property developers rallied, boosted by strong profit growth in bellwether Vanke. Shares of China's largest developer pared gains following its earlier 2 percent jump after reporting a 22 percent annual rise in first-half net profit. Poly Real Estate rose 2.3 percent on the news.
Macau casino operators dragged on the index with MGM China lower by 4 percent despite announcing that net profit results beat expectations.
Kospi below 1,900
South Korea's benchmark index fell 1.5 percent to its lowest levels since July 22, weighed down by a 2.5 percent drop in Samsung Electronics.
The tech giant is awaiting a ruling by the U.S. International Trade Commission on whether to ban imports of some Samsung devices into the U.S.
(Read more: We are sticking with South Korea: Stanchart's Bindra)
The Kospi index is down over 3 percent from it's 200-day simple moving average (SMA) of 1,941 points, last hit on June 5.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC