ASX sags 0.4%
Australia's S&P ASX 200 index narrowed losses to end at a one-and-a-half-week low, recovering slightly from poor data from its biggest trading partner - China - and the threat of a credit rating downgrade by S&P. The Australian dollar was battered by the news, down as much as 1 percent to $0.7267 against the greenback - its lowest level since May 2009 - earlier in the session.
Among laggards, Evolution Mining and Newcrest Mining tumbled 6.9 and 4.8 percent, respectively, while Alacer Gold retreated 4.4 percent as the fall in gold prices see no signs of abating.
Macquarie Group led losses among financials, tanking 3.9 percent, after the management said it will look to raise equity for potential acquisitions at its annual general meeting on Thursday.
"The triple combination of weak Chinese data, soft commodity prices and threat of a credit rating downgrade dragged market sentiments in Australia. We saw domestic equities getting whacked, particularly resource companies and financials, but it could have been worse if not for a mild recovery in energy and utility counters," IG's market strategist Bernard Aw wrote in a note.
Read MoreDon't be scared: Australia stocks still a buy
Nikkei eases 0.7%
Japan's Nikkei 225 tracked the negative leads from Wall Street to end lower.
Losses in the index heavyweights weighed on the bourse; Fast Retailing and Fanuc tanked nearly 2 percent each, while Softbank receded 0.7 percent. Softbank, the telecom and internet investor, is gearing up for dollar and euro-bond issuances, according to a report by the Nikkei business daily on Thursday.
Major exporters turned negative as the yen bounces into the 123 territory against the U.S. dollar. Honda Motor and Panasonic sagged 0.7 and 0.5 percent, respectively, while construction equipment maker Komatsu closed down 1.6 percent, hurt by the lackluster results of Caterpillar.
Meanwhile, the International Monetary Fund warned Japan that it needs to speed up "high impact" structural reforms and prepare for further monetary easing, economists wrote in their annual assessment of the world's third-biggest economy.