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Asian shares fall on US rate hike fears, but Shanghai bucks trend

Fears that an interest rate hike in the United States is imminent drove Asian stock markets outside Shanghai lower on Monday.

Wall Street's drop of more than 1 percent last Friday also weakened investor sentiment as a stronger-than-expected nonfarm payrolls bolstered the case that the Federal Reserve could hike interest rates sooner rather than later.

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The monthly indicator showed a gain of 295,000, above expectations of 240,000 but down from 257,000 in January. The unemployment rate fell to 5.5 percent, while hourly wages ticked up 0.1 percent, below consensus and down from the surprise 0.5 percent gain in January.

"Looking at the employment numbers, they've had a good run and 5.5 percent in unemployment is pretty close to full employment," Deb Clarke, head of Investment Research at Mercer, told CNBC Asia's "Squawk Box." "One of the impact is obviously a stronger dollar, which could see a break on growth, but there's a fair probability that [the Fed] will raise rates in June."

Hence, the blue-chip Dow Jones Industrial Average closed down 1.5 percent, while the S&P 500 finished 1.4 percent lower. The Nasdaq Composite traded down 1.1 percent last Friday.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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ASX loses 1.3%

Australia's S&P ASX 200 index hit a two-and-a-half-week low as a broad-based decline among its miners and oil producers weighed on the resource-heavy bourse.

BHP Billiton and Rio Tinto fell 1.5 and 2.1 percent each after iron ore prices hit a record low following reports of Chinese steel mill closures. Oil and gold-related counters tracked losses in oil and gold prices; Santos and Oil Search lost 3.6 and 1 percent, respectively, while Newcrest Mining slumped nearly 5 percent.

The big four lenders also traded lower; Westpac and National Australia Bank led losses with a drop of 1 percent each, while Australia & New Zealand Banking and Commonwealth Bank of Australia shed 0.7 percent each.

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Nikkei falls 1%

Japan's Nikkei 225 trimmed losses from an intra-day low of 18,733, which was sparked by government data showing the world's third-biggest economy grew less than previously thought in the final quarter of 2014. Gross domestic product (GDP) grew an annualized 1.5 percent in the October-December period, down from an initial reading of 2.2 percent in February, but still showed Japan emerging out of recession.

Heavyweight components including Softbank and Fast Retailing sagged 1 and 1.7 percent each.

A weaker yen, which traded near last Friday's one-month low of 121 to the dollar, failed to lift sentiment; exporters such as Sony fell 1.6 percent, while Honda and Panasonic fell 0.7 and 1 percent each.

Read MoreChina, central banks are key risks this week

Shanghai Comp up 1.9%

China's Shanghai Composite index staged a strong rebound in the afternoon session, after falling nearly 1 percent in the morning, as gains in banking stocks offset losses in brokerages.

China Construction Bank and Bank of China rallied over 5 percent each, while Bank of Communications and Agricultural Bank of China surged more than 4 percent each. These helped to cover declines in brokerages, which were among the hardest hit on Monday. China Merchants Securities receded more than 4 percent, while Haitong Securities and Founder Securities lost 1.9 and 2.5 percent each.

On the domestic data front, data over the weekend showed a 48 percent surge inChina's exports for the month of February, sharply above analysts' forecasts.

Kospi slips 1%

South Korea's Kospi index retreated to a one-week low on the back of a lackluster showing by the index heavyweights, after managing a five-month closing high of 2,012 last Friday.

Hyundai Motor and Kia Motors notched down 2.3 and 0.5 percent, respectively. Other blue-chip majors such as Samsung Electronics, which is in the news for launching a record-breaking marketing plan to support its new Galaxy S6 smartphone, eased 1.5 percent.