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Asia stocks mixed on Iraq violence; Fed in focus

Asian equities finished a choppy session mixed on Monday with escalating violence in Iraq weighing on sentiment.

Rebels from the Islamic State of Iraq and the Levant seized the northwestern city of Tal Afar on Sunday, further solidifying their grip on the country's northern region. The offense came after they claimed to have executed 1,700 government soldiers over the weekend.

Read MoreIran and the US: Can frenemies unite over Iraq?

Trading was also cautious ahead of the Federal Reserve's policy review on Wednesday.

"The week is, quite literally, centered on the FOMC meeting. FOMC fixation is coloured by the sharp contrast between ECB easing and BoE flagging sooner-than-expected hikes. To be sure, the Fed is not expected to recant on normalization, and another $10 billion reduction in asset purchases is almost universally expected," said Vishnu Varathan, senior economist at Mizuho in a note.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Nikkei 1% lower

Japanese shares fell to a two-week low, retreating further from a three-month high of 15,206 points hit a week ago. A stronger yen dampened buying as the currency traded below the 102 level against the greenback.

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Mitsubishi Heavy Industries fell nearly 4 percent on reports that it is teaming up with Siemens to make a joint offer for French energy equipment maker Alstom.

Chip makers bucked the trend after Intel raised its full-year revenue outlook on Friday.Tokyo Electron led gains by 2.5 percent while Advantest rose 0.6 percent.

China shares mixed

The mainland's benchmark Shanghai Composite index rose 0.7 percent to its highest level since April 21 for the second straight session. Sentiment rose after Premier Li Keqiang said on Monday that Beijing is confident it will hit its growth target of 7.5 percent this year.

Read MoreChina's fine-tuning adds up to stimulus by stealth

Energy stocks rose after President Xi Jinping said over the weekend that the country needs a revolution in the way that it produces and consumer energy. PetroChina rose 1 percent while Sinopec added 1.6 percent.

Hong Kong's benchmark Hang Seng Index was flat as investors reacted to new ownership limits for cross-border stock investment released over the weekend. A single foreign investor cannot hold more than 10 percent of a mainland-listed company, according to regulators.

Read MoreChina, central banks to dominate week in Asia

ASX up 0.1%

Australian shares reversed losses to close just above the flatline, rebounding after Friday's three-and-a-half week low.

Miners were mixed as iron ore prices continued to fall, slumping to just above $90 a ton. BHP Billiton closed up 1 percent while Atlas Iron lost over 4 percent.

Read MoreGold hits 3-week high on Iraq; platinum group metals up

Echo Entertainment surged 7.5 percent after upgrading its guidance for the current fiscal year to a net profit of A$150-$153 million.

Kospi adds 0.1%

South Korea's benchmark index also enjoyed a modest rebound after suffering its worst session in seven weeks on Friday.

Telecom firms were in focus on news that Seoul and the European Union are expected to announce an agreement on 5G networks, according to a draft of the agreement obtained by The Wall Street Journal. SK Telecom added 1 percent while LG U+ eased mroe than 2 percent.

Sensex down 0.1%

Indian shares declined after May wholesale price inflation rose to 6 percent on year, much higher than forecasts for a 5.4 percent gain and April's 5.2 percent increase.

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