Asian shares fell on Monday and the dollar firmed as investors shied away from risk ahead of the closely fought U.S. presidential election, the result of which could define a clear direction for broader markets.
Markets are pricing in a victory for President Barack Obama in enough swing states that would return him to the White House.
Investor sentiment is also veering on the cautious side as the Chinese Communist party prepares for a once-in-a-decade leadership transition on Thursday.
The transition is closely watched in financial markets, with hopes high that China's new leadership will deliver stimulus measures to bolster economic growth.
The FTSE CNBC Asia 100 Index, which measures markets across Asia, fell by 14.6 points, or 0.2 percent.
Japan's Nikkei fell as the yen weakened, which triggered profit-taking from last week's gain while investors shunned risk before the winner of the tightly fought U.S. election is known.
The Nikkei was down 0.5 percent to 9,007.44, while the broader Topix was 0.6 percent lower at 747.95.
Japanese exporters were helped by the yen's decline, with Honda Motor adding 1.2 percent to 2,497 yen, and Nissan Motor gaining 0.2 percent to 687 yen.
Toyota rose 2.4 percent to a one-month high at 3,215 yen after public broadcaster NHK said it was set to slightly raise its operating profit forecast.
Amid sluggish global growth, company earnings have been weak this quarterly reporting season. About 56 percent of the 101 Nikkei companies that have reported earnings undershot market expectations, according to Thomson Reuters StarMine.
Yamada Denki fell 5.8 percent to 3,225 yen after the home electronics retailer slashed its operating profit forecast for the year ending March 2013 by 39 percent to 57.3 billion yen, citing weaker sales.
Shares of eAccess surged 13 percent to 51,500 yen, a 19-month high, after mobile operator Softbank said on Friday it would change its share swap ratio with eAccess, which it acquired in a $1.84 billion deal at the start of last month.
China shares eased slightly as investors paused after the recent rally ahead of the start of the 18th Party Congress that will usher in the country's next generation of leaders and the U.S. presidential election on Tuesday.
The CSI300 of top Shanghai and Shenzhen listings closed down 0.2 percent while the Shanghai Composite ended down 0.1 percent with financials the biggest drags on the indices.
Hong Kong shares eased slightly, as caution ahead of the U.S. presidential election spurred mild profit-taking after a strong run-up last week lifted the Hang Seng Index to a 15-month high.
The Hang Seng Index closed 0.5 percent lower at 22,006.4 points, after gaining 2.6 percent last week. The index is up nearly 20 percent this year.
Foxconn International Holdings, the world's biggest contract maker of cellphones, surged as much as 35 percent after Citigroup upgraded the stock to a 'buy' and said it expected the firm to start assembling iPhones this year. Foxconn shares are still down nearly 28 percent this year.
Profit-taking in index heavyweights such as HSBC Holdings and Industrial and Commercial Bank of China (ICBC) weighed on the benchmarks and offset strength in property developers. HSBC, scheduled to release third-quarter results after market hours, fell 0.3 percent while ICBC closed down 1.3 percent.
South Korean shares eased, dragged down by steep declines for Hyundai Motor and Kia Motors while investors avoided risk ahead of the U.S. presidential election.
Shares in Hyundai Motor closed down 7.2 percent after trading at their lowest levels in more than a year, since the automaker and affiliate Kia acknowledged they overstated the fuel economy of more than 1 million vehicles sold in the United States and Canada.
Blue-chips were mostly down, with tech heavyweight Samsung Electronics and chipmaker SK Hynix among the few shares bucking the trend by rising 1 percent and 0.8 percent respectively.
Local security brokerages fell 0.9 percent after South Korea's anti-trust agency said on Sunday it fined 20 brokerages some 19.2 billion won ($17.6 million) in total and plans to report six brokerages to prosecutors for fixing the rates of state-issued baby bonds for six years.
Australian shares recovered from early losses after stronger-than-expected retail figures helped boost sentiment, offsetting softer gold prices and a weak lead from offshore.
Australian retail sales rose a shade more than expected in September but could still not prevent a dip in spending for the whole third quarter, a mixed result that did little to change divided opinions over whether Australia's central bank will cut interest rates on Tuesday.
The S&P/ASX 200 index closed up 0.3 percent or 14.1 points at 4,474.1, adding to a 0.1 percent gain on Friday.
Gold slid 2 percent in heavy trade on Friday, breaking below $1,690 an ounce for the first time in about two months.
Gold miners Newcrest dropped 1.6 percent, while Regis Resources lost 1.8 percent.
Northern Iron crashed 36 percent after would-be- suitor, India's Essel Mining, withdrew a takeover offer for the company.
Banks recovered from morning losses, led by Westpac Banking, which rose 1.3 percent after beating forecasts with a 9 percent rise in second-half cash profit after keeping a tight rein on costs.
National Australia Bank bucked the trend, slipping 0.1 percent.
The Reserve Bank of Australia will meet on Tuesday. Analysts expect the cash rate to be cut by 25 basis points to 3 percent.
New Zealand's benchmark NZX 50 index slipped 0.1 percent, or 5.8 points to 3,908.3.
In India, the BSE index ained 0.04 percent, while the 50-share NSE index nded up 0.08 percent.