Asian equities declined on Tuesday, as downbeat inflation data from Asia's largest economy and the prospect of higher U.S. interest rates sooner rather than later weighed on trading sentiment.
China's closely-monitored consumer price index (CPI) rose 1.2 percent last month from the year-earlier period, a shade below Reuters' expectations for a rise of 1.3 percent and nudging down from a 1.5 percent gain in April. Meanwhile, producer prices stayed stubbornly weak, with a bigger-than-expected fall of 4.6 percent.
Overnight, U.S. major indexes handed over an unimpressive lead by finishing near session lows, as investors weighed multi-month highs in bond yields, while mulling the prospect of the Federal Reserve tightening monetary policy as early as September.
Mainland indexes down
After flitting between gains and losses following the data release, China's benchmark Shanghai Composite index closed down 0.4 percent. The blue-chip CSI300 index fell 0.7 percent, while the Shenzhen Composite notched down 0.15 percent following a 1.7 percent tumble on Monday.
The dismal set of economic data failed to stir stimulus bets, as investors awaited the index publisher MSCI's decision on whether to include mainland-listed A-shares in its benchmark emerging market index.
"The consensus is 50-50 for A-shares to go into the MSCI emerging market index, but there are some evidence that this will happen down the track. It's probably just a matter of time. However, it appears that the market may be a little too hot for MSCI to do anything right now," Martin Lakos, division director at Macquarie Private Wealth, told CNBC's "The Rundown" early Tuesday.
As such, Shanghai-listed blue-chip stocks saw a reversal in direction by mid-morning trade. Agricultural Bank of China and Industrial and Commercial Bank of China lost nearly 2 percent each, while China Construction Bank retreated 1.5 percent.
In Hong Kong, the Hang Seng index tracked their mainland peers lower. Casino gaming plays were among the biggest laggards on the bourse, with Melco Crown and Galaxy Entertainment slumping more than 5 and 3 percent, respectively.
The risk-off sentiment in this sector can be attributed to research from Sterne Agee CRT which showed Macau's gaming revenue down 46 percent so far this month.
Shares of HSBC closed down 0.4 percent before rising as much as 1 percent following the British lender's announcement to cut costs by as much as $5 billion within two years and lay off as many as 25,000 staff in a widely-anticipated strategy update to investors.
Nikkei loses 1.8%
Japan's benchmark Nikkei 225 widened losses in the afternoon session to eventually end down with its biggest loss in almost a month. The Tokyo index finished at a near three-week low.
Read MoreJapan's bittersweet inflation
ASX drops 0.5%
Australia's index settled at its lowest four months as downbeat inflation data from China —Australia's key trading partner— sparked a pullback in key sectors. The Sydney bourse was trading for its first session of the week, following an extended weekend.
The soft data also sparked a sudden move below the $0.7700 mark in the Australian dollar, from around $0.7712 prior to the data.
Meanwhile on the domestic data front, business confidence rebounded to a nine-month high last month as sales and profits improved, a survey by the National Australia Bank showed.
Among the major lenders, Westpac was the sole bright spark which held on to gains of 0.5 percent. Commonwealth Bank of Australia, Australia and New Zealand Banking and National Australia Bank closed down between 0.1 and 0.8 percent.
Underperforming the bourse, Nine Entertainment and Seven West Media plummeted 16.1 and 11.4 percent, respectively, after issuing a profit warning.
South Korea's Kospi index finished nearly unchanged after bobbing between gains and losses earlier in the session.
Mixed trading among heavyweight components likely kept the bourse rangebound. Hyundai Motor closed up 0.7 percent, having leaped up more than 1 percent on news that it is contemplating developing a larger premium sport utility vehicle (SUV).
Meanwhile, the index's top weighted stock Samsung Electronics erased 2.4 percent.
Southeast Asia sinks
Southeast Asian bourses faced selling pressure on Tuesday, with Indonesia's Jakarta Composite index plunging 2.3 percent to a near seven-month low. The rupiah, meanwhile, set a 17-year low for the fourth straight trading session, as the U.S. dollar regained its footing in Asian trade.
Stocks in the Philippines retreated 2.16 percent to touch its lowest levels since January 12, while those in Malaysia shaved off 0.6 percent to hover near a five-month low attained in the previous session.
Thailand's SET index also erased 1 percent, in line with weakness in the region.
Meanwhile, Singapore shares eased 0.5 percent to touch its lowest since January, chalking up a four-session losing streak.