Asia Markets

Asian stocks extend US rout; Nikkei drops 3% to 1-month low

Asian equities were mostly lower on Tuesday with Japan's benchmark index as the region's top loser following a sharp sell-off on Wall Street overnight.

The was slammed by a triple-digit drop after Atlanta Federal Reserve President Dennis Lockhart said that the U.S. central bank should push ahead with its efforts to wind down monetary stimulus.

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Nikkei skids 3%

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Japan's benchmark Nikkei resumed trade at its lowest level in a month due to a sharp uptick in the yen following Monday's holiday. The currency traded within sight of Monday's one-month high of 102.97 against the greenback following Friday's weak U.S. jobs report.

(Read more: Dollar bulls: Time to pack up and go home?)

That saw blue-chip stocks sell off across the board. Toyota Motor, Sony and Mitsubishi Electric fell over 2 percent each while index heavyweight Fast Retailing slumped 5 percent.

However, Suntory Beverage bucked the trend to gain 0.3 percent after parent firm Suntory Holdings announced .

Also weighing on sentiment was data showing November's current account deficit came in wider than expected at $5.74 billion, marking the second straight month of deficits.

Shanghai up 0.9%

Mainland shares rebounded from the previous session's five-month low to break a five-day losing streak thanks to strong gains in home appliance stocks. Meanwhile, the hit a new record high at 6.0415 per dollar for a second straight session.

Sichuan Changhong Electronics spiked nearly 10 percent after the Securities Times reported the production value of smart home appliances could rise to 1 trillion yuan in 2020.

Among the top gainers, rose over 4 percent despite news that it will pay compensation for a pipeline explosion that occurred last year.

fell 0.6 percent after announcing a three-month delay in the launch of its newest sports utility vehicle.

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Joseph Stiglitz: US needs fiscal stimulus

Sydney drops 1.5%

Australia's benchmark S&P ASX 200 closed at its lowest level in over three weeks on caution ahead of the corporate earnings season. Data from Thompson Reuters showed the index posted its biggest one-day decline in over three months.

Meanwhile, the Australian dollar retreated from a one-month high of $0.9087 U.S. cents.

Banks and resources led declines with all of Australia's "Big 4" lenders down over 1 percent each while blue-chip miners BHP Billiton closed down 1 percent and Atlas Iron fell 3.6 percent on falling iron-ore prices.

Engineering firm Forge closed 18 percent lower following an earlier 30 percent slump after warning of an additional $23 million to its previously announced $28 million profit write-down for the 2014 fiscal year.

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Kospi slips 0.1%

South Korean shares bounced between gains and losses in choppy trade but larger losses were capped as exporters benefited from a stronger Japanese currency. Both Hyundai Motor and rose over 1 percent each.

(KEPCO) rallied over 3 percent after announcing that it expects to make a profit for 2013, its first in six years, thanks to self-rescue efforts.

The benchmark also got a boost from data that showed December exporters rose an annual 7 percent, which indicated that the nation's economic recovery was underway.

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India down 0.5%

Indian shares posted modest losses ahead of the release of December wholesale price inflation data.

By's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC