Nikkei losses deepen on strong yen; US rebound lifts rest of Asia

Japan's benchmark index extended losses on Wednesday due to a stronger currency but the rest of Asian shares rose following a recovery on Wall Street overnight.

U.S. stocks climbed on Tuesday, with the Nasdaq Composite bouncing back from its worst three-day hit since 2011, as investors sought recently hammered social media and Internet shares such as Google, Facebook and

Strength in Asian currencies was in focus with the U.S. dollar index near three-week lows.

The yen moved off Tuesday's three-week high against the greenback but remained at a one-week high against the euro while the Korean won rose to its strongest level since August 2008 at 1,044 per dollar. Meanwhile, the Australian dollar hit a five-month high of $0.9385.

Read MoreDollar-yen slumps most in 8 months, more pain in store?

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Focus now turns to the release of minutes from the U.S. Federal Reserve's last policy meeting. Investors will watch to see if there is a more hawkish tone, particularly after Chair Janet Yellen said in March that short-term interest rates may rise sooner-than-expected.

Nikkei skids 2%

Japan's benchmark Nikkei fell for a fourth straight session, closing at its lowest levels in three weeks, on a stronger yen. The currency rallied after Bank of Japan chief Haruhiko Kuroda provided little hints of future monetary stimulus at the conclusion of the central bank's policy meeting.

"Tuesday's trade balance was indifferent; the BoJ left nothing to the imagination, the spectrum of inputs to stimulus reasoning broadened and has its timeline extended from two years to 'medium term'. None of this is going to see the yen weakening on the scale seen," said Evan Lucas, market strategist at IG.

Read MoreWill Japan's tax hike spur a fiscal crisis?

Retailers fell on the back of earnings updates. Department store Takashimaya eased 0.7 percent following an earlier 2 percent slide after reporting that domestic sales in March jumped an annual 33 percent. FamilyMart slumped 7 percent despite saying on Tuesday that it expects pretax profit to rise 1 percent in the year ending February 2015.

Takeda Pharmaceutical fell 1 percent, extending the previous day's 7 percent loss, after saying it will fight a jury decision to award damages of $6 billion against the Japanese drug company.

The index fell below its 200-day simple moving average (SMA) of 14,571 for the first time in eight sessions.

ASX up 1%

Australia's benchmark S&P ASX 200 index hit a new five-and-a half-year high, snapping a two-day losing streak, thanks to strong buying frenzy amid retailers.

David Jones surged 22 percent after agreeing to a takeover offer from Woolworths, and that sparked a rally throughout the sector. Myer jumped 4 percent while Harvey Norman climbed 3 percent.

Read MoreAustralia's next wave of energy investment under threat

Alumina rallied 2.7 percent, tracking gains in Alcoa after the U.S. aluminum producer's first-quarter earnings beat analysts' expectations with an after-tax operating income of $189 million.

Positive economic data also underpinned gains. A private survey of consumer confidence rose for a the first time in five months while the number of home loan approvals rose at their strongest monthly gain in over six months.

Shanghai up 0.3%

China's benchmark Shanghai Composite closed at a near two-month high for a second straight session, extending gains after Tuesday's 2 percent rally.

Mid-tier banks pulled back after rallying in the previous session, with Minsheng Bank leading losses by 1 percent. Investors also digested comments from the country's banking regulator. On Tuesday, officials said bad loans may rise this year, but will remain at 1 percent due to adequate provisions.

Read MoreShanghai stocks shake downtrend; three paths possible

Insurers declined despite news that rules for mergers and acquisitions in the sector will be relaxed. Insurers will now be able to buy stakes in more than one peer that competes in the same market segment. China Life Insurance eased 0.6 percent and Ping An Insurance lost 1 percent.

Meanwhile, fears of another corporate default weighed on sentiment after polyester firm Zhejiang Huatesi Polymer Technical asked a local court for bankruptcy protection in early March, according to an announcement on the Anji County People's Court website.

Kospi gains 0.3%

South Korean shares closed at a fresh 2014 high, extending gains for a second session.

KT Corp climbed 4 percent after saying on Tuesday that 70 percent of its workforce will be asked to voluntarily leave their jobs, according to the Korea Herald.

Read MoreEmerging Asia - home to hottest property markets?

India gains 1.6%

Indian shares resumed trade higher following Tuesday's public holiday and finished the session with a gain of 1.6 percent.