Asian shares were unable to hold onto gains on Wednesday, as investors stayed risk averse due to weak corporate earnings results worldwide and enduring worries over economic slowdown.
China's manufacturers saw growth shrink for a 12th successive month in October, but output was at a three-month high and the most robust order books since April signaled a strengthening recovery, the HSBC Flash Manufacturing Purchasing Managers Index showed Wednesday.
Asian markets will await the outcome of the Federal Reserve's two-day meeting. The Fed is expected to hold back on further stimulus measures in order to assess the impact of its third round of quantitative easing, launched last month.
The FTSE CNBC Asia 100 Index, which measures markets across Asia, lost 0.4 percent.
Japan's Nikkei average snapped a seven-session winning streak as poor U.S. earnings prompted investors to pocket gains on export-focused firms, although better-than-expected Chinese manufacturing data helped limit losses.
The Nikkei fell 0.7 percent to 8,954.30, ending below the key 9,000-mark after closing above that level in the previous three sessions. The broader Topix lost 0.8 percent to 743.27.
Sharp, however, bucked the downtrend after the Nikkei business daily said it had started selling a smartphone in China developed in tandem with Taiwanese company Hon Hai Precision. Sharp's shares closed up 6.3 percent and it was the most-traded stock on the main board.
Japanese social gaming sites DeNa nd Gree also gained in heavy trade after Facebook said mobile advertising revenue had roughly tripled in the third quarter, reassuring investors who had feared revenues of web-based firms would be hit by the shift to smartphones from personal computers.
DeNa ended up 2 percent while Gree advanced 3.2 percent.
But export-oriented firms weakened after a rally propelled by a softer yen over the past week and a half, with Panasonic falling 2 percent and construction machinery maker Komatsu slipping 2.5 percent.
KDDI gained 1.1 percent after the Nikkei business daily said it was going to integrate its cable business with Sumitomo by late 2013, after acquiring current market leader Jupiter Telecommunications, which lost 2.8 percent as investors judged it overpriced. Sumitomo also lost 0.3 percent.
Kawasaki Heavy Industries sagged 6.3 percent after the company almost halved its first half operating profit forecast to 10.3 billion yen ($129 million), citing weaker-than-expected sales of precision equipment and motorcycles due to a slowdown in China and Europe.
Both Canon and Ricoh lost 2 percent after U.S. rival Xerox, historically known for printers and copiers, reported lower-than-expected third-quarter revenue and cut its full-year earnings forecast.
But All Nippon Airways went against the trend by gaining 1.3 percent after the Nikkei business daily said the carrier was expected to post an operating profit of 70 billion yen ($877 million) for the six months ended September, a 40 percent year-on-year increase, on strong overseas travel.
China shares closed mixed, as weakness in the Chinese financial sector outweighed strength in Huaneng Power after positive third-quarter earnings.
The CSI300 Index of the top Shanghai and Shenzhen listings ended down 0.2 percent at 2,307.8. The Shanghai Composite Index closed up 0.1 percent.
Hong Kong shares posted a fresh 2012 closing high, buoyed by expectations of more capital inflows into the territory after its de facto central bank moved to weaken the Hong Kong dollar for the fourth time in less than a week.
The Hang Seng Index closed up 0.3 percent at 21,763.8, after earlier posting the year's highest intra-day level at 21,802.5. The China Enterprises Index f the top Chinese listings in Hong Kong slipped 1 percent.
Expectations of further capital inflows buoyed shares of bourse operator Hong Kong Exchange(HKEx) to its highest since late April.
Weakness in fashion retailer Esprit Holdings limited gains in Hong Kong. Esprit plunged 9.5 percent after it announced plans to raise $677 million to fund a restructuring of its key businesses. Losses on Wednesday brought Esprit's share price to its lowest since Aug. 6, paring gains after the company appointed an executive from larger rival Inditex s its new CEO.
Australian shares fell 0.8 percent to a one-week closing low on Wednesday, led down by mining stocks after gold and copper prices fell.
A survey showing Chinese manufacturing output at a three-month high in October lifted shares off their session lows, but the market was unable to sustain the move.
The benchmark S&P/ASX 200 index fell 37.3 points to 4,505.8, according to the latest data, the weakest close in a week.
Australian consumer prices rose a surprisingly large 1.4 percent in the third quarter as energy costs spiked on the introduction of a carbon tax, sending the local dollar higher as the market
pared expectations on the speed and scale of further rate cuts.
The Aussie jumped to a high of $1.0318 , from $1.0260 after the market pared expectations on the speed and scale of further rate cuts and the positive HSBC China Flash PMI data.
New Zealand's benchmark NZX 50 index slipped 2.8 points to 4,001.45, ending just below a 4-1/2 year closing high of 4,004.26 hit on Tuesday.
Fairfax Media shares rallied 8 percent at a session high after CEO Greg Hywood said there was a "slight improvement" in revenue since August in the company's annual general meeting.
Mr. Hywood said revenues in September and October fell 7.5%, which was an improvement on the first six weeks of fiscal 2013 when they slipped 10%.
Shares of Whitehaven Coal were on a trading halt as the board reviews their outlook for the remainder of FY 2013. Mining magnate Nathan Tinkler threatened to use his voting power to oust most of the board, pressing it for a detailed earnings update ahead of its annual meeting, according to a letter sent to the Australian miner.
New Zealand's benchmark NZX 50 index fell 0.05 percent to 4,002.1, retreating from a 4-1/2 year closing high of 4,004.26 hit on Tuesday.
South Korean shares ended slightly lower after upbeat China PMI figures and better-than-expected earnings from SK Hynix nd LG Electronics helped the index come back from heavier opening losses.
Shares in SK Hynix and LG Electronics gained 4.1 percent and 1.4 percent respectively after the release of third quarter earnings.
The Korea Composite Stock Price Index (KOSPI) ended down 0.67 percent at 1,913.96 points, extending a four-day loss.
Large-cap shares were mostly down, with market heavyweight Samsung Electronics down 1 percent while Hyundai Heavy Industry fell 3.2 percent following Tuesday's losses after the shipmaker said it will conduct its first ever "voluntary retirement" scheme.
Automakers were also underperforming, with Hyundai Motors own 3.8 percent and affiliate Kia Motors also dropping 4.8 percent.
Markets in India are closed for a public holiday.