Asian stocks declined in rangebound trade on Monday in the absence of a lead from Wall Street last week due to the July 4 U.S. holiday.
"The Slaviansk take over is among the biggest victories for the government since the beginning of the turmoil. Markets have not focused too much on Ukraine's issues recently but further escalation in the crisis may swing sentiment. Should this be the case, we may see risk aversion re-emerge in the near term," said analysts at Mizuho Bank in a morning report.
The mood was also cautious after International Monetary Fund chief Christine Lagarde warned over the weekend that the pace of global growth may be weaker than expected in the second half of the year due to weak investment. Lagarde also said she does not see a hard landing for China.
Nikkei 0.4% lower
Japanese shares widened their losses after trading flat for most of the session as investors booked profits on the 's five-and-a-half-month closing high last week. Sentiment was unable to get a boost after Bank of Japan chief Haruhiko Kuroda said that the central bank will maintain its stimulus program for as long as necessary to achieve its 2 percent inflation target.
Asahi Group added over 1 percent after the Nikkei reported that it's expected to post its best ever first half operating profit.
Read MoreCapital flows moving to East Asia
China shares flat
Mainland stocks barely moved on caution ahead of a slew of economic data due this week, starting with June consumer and producer prices on Wednesday.
Infrastructure stocks were among the most actively traded on the Shanghai Composite. Railway firms China CNR and CSR Corp were 3.6 and 2.6 percent higher, respectively, while China State Construction added 0.3 percent.
ASX down 0.1%
Australia's benchmark index retreated after closing at a one-month high on Friday, snapping three straight days of gains.
Mining giant BHP Billiton added 0.3 percent on reports that six bidders are lining up to bid for the firm's Nickel West unit, which is expected to fetch as much as A$800 million.
Other miners lost ground as copper prices started the week little changed after posting their biggest weekly rise in nine months on Friday. Fortescue Metals closed down nearly 3 percent while Gibson lost over 5 percent.
Kospi 0.2% lower
South Korean shares managed to end above the 2,000 mark but heavy losses among blue chip stocks weighed on the benchmark Kospi.
Samsung Electronics lost over 1 percent on pessimism ahead of Tuesday's earnings report. Many analysts expect the tech giant to post a fourth straight quarter of profit declines.
Sensex up 0.6%
India's benchmark index rose above 26,000 points for the first time ever on optimism ahead of Thursday's federal budget.