Chinese shares sold off on Monday following a weak services sector report, while profit-taking and a stronger yen saw Japan's Nikkei fell below 16,000 points on its first trading day of the new year.
Investors also digested comments from Federal Reserve officials last week, including Chairman Ben Bernanke and Philadelphia President Charles Plosser. Bernanke reiterated the Fed's commitment to keeping interest rates low, while .
Further hints on the direction of U.S. monetary policy may be seen in the release this week of the minutes from the Fed's most recent meeting, at which the central bank began tapering it's stimulus. The week ahead also sees a raft of speeches from regional Fed presidents as well as the December jobs report.
"It is a week where event risk in the shape of central bank narrative, economic data and U.S. treasury auctions litter every asset class and geography. With this in mind, perhaps those traders who hadn't had a chance to react last week have come in with a modestly pessimistic view on equities, " wrote Chris Weston, chief market strategist at IG in a note.
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Nikkei skids 2.3%
Japanese investors booked profits on the benchmark index's strong 2013 gains, leading the Nikkei to close near a 2-week low. The index resumed trade following last week's holiday after ending 2013 with 9 straight sessions of gains and a total rise of 57 percent.
Large-cap stocks were hit as dollar-yen traded below the 105 handle, below the five-year high it hit on Monday when Japanese markets were last open. Fast Retailing tumbled nearly 6 percent while and eased over 3 percent each.
(Read more: Is the honeymoon over for Japan equities?)
Automakers were unable to gain on news that global new car sales hit a record high in 2013 for four consecutive years. fell 2 percent while eased 1.4 percent.
Shanghai down 1.8%
The benchmark declined to it's lowest levels since August, extending losses for a fourth session, after .
Commodity stocks underperformed after Beijing moved to tighten control over its rare earth sector by getting bigger players to buy smaller ones. Batou Steel fell 2.7 percent while Jiangxi Copper lost over 3 percent.
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Vanke, the country's largest property developer by revenue, fell 4.6 percent despite announcing on Friday that sales rose 21 percent last year. Other property developers also fell on the news; China Merchants Property and Poly Real Estate slumped over 5 percent each.
Sydney slips 0.5%
Australia's resource-heavy benchmark S&P ASX 200 posted it's biggest one-day drop in three weeks due to lower commodity prices, while caution also set in ahead of a raft of local data this week, including trade, retail sales and building figures.
Karoon Gas was one of the worst performing stocks, down 5 percent, while Fortescue Metals eased 2 percent after Shanghai steel futures hit their lowest in nearly seven months.
(Watch now: Macquarie: Australian sentiment is improving)
The Australian dollar meanwhile, traded below 90 U.S. cents after rising above those levels to hit a three-week high on Friday.
Kospi up 0.4%
South Korean shares outperformed their Asian peers as the benchmark rebounded from Friday's 4-month low due to the pause in the yen's decline.
Emerging markets hit
Thailand's benchmark fell 1 percent on continued political unrest but finished the day 0.5 percent higher. Anti-government protesters marched through Bangkok over the weekend, with more marches to be held this week.
Indonesia'as eased 1.3 percent after the nation's finance minister said the economy contracted by 1.4 to 2 percent in the fourth-quarter.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC