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.