Malaysia's KLCI shed 3 percent on the revamp of the country's energy price system. Shares of independent power producer YTL Power and top planters Sime Darby and IOI Corp fell after the government imposed a windfall tax on power producers and palm oil millers as part of the overhaul. Tenaga Nasional, has planned to raise power tariffs by up to 11 percent, a much-awaited relief for the dominant power distributor which has been battling mounting fuel costs.
Tokyo's Nikkei 225 Average edged down 0.65 percent as lower oil prices took a toll on Mitsubishi and other trading houses, while banks slid on renewed worries about U.S. financial institutions in the face of possible bond insurer downgrades. A rise in Japanese government bonds also eroded stock strength, but generalized bargain-hunting as well as buying of shares such as Softbank, which said it would start selling Apple's iPhone in Japan, helped keep the downside solid.
Seoul shares closed flat after dropping nearly 1 percent earlier in the session, with Hana Financial Group leading the recovery after a favorable decision from authorities on a tax case.
Australian shares fell nearly 1 percent to a seven-week closing low, dragged down by heavyweight resource firms such as BHP Billiton and Woodside Petroleum on weaker oil and metals prices.
Hong Kong shares rose half a percent in skittish trade which saw the main index test its 24,000 support level as gains in Sinopec and Chinese telecom firms balanced out losses in resources and Cosco Pacific. Falling crude oil prices sent oil refiner Sinopec up around 4 percent, while Chinese offshore oil producer CNOOC extended losses to drop 2.1 percent.
Singapore's Straits Times Index closed 0.3 percent higher, despite heavyweights such as UOB and SIA losing ground. Genting International rose after it agreed to jointly develop an entertainment center in the UK for 90 million pounds ($176 million).
Chinese stocks closed 0.5 percent lower as coal shares such as Yanzhou Coal Mining and Shenhua Energy tumbled after the province of Shandong introduced a temporary price cut for some thermal coal to ensure sufficient power supplies in summer. The move sparked fears that other provinces could follow suit.