Nikkei slumps 3%
Japan's Nikkei 225 fell below the key 20,000 level after chalking up a four-day losing streak.
Financials and export-oriented counters were among the hardest-hit; Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group eased more than 4 percent each, while Mizuho Financial lost 3.3 percent.
Among the blue-chip exporters, Sony and Toshiba sank more than 4 percent each, as the yen strengthened against the dollar.
Meanwhile, shares of Apple suppliers tracked the 2 percent decline in the iPhone maker overnight, with electronics parts makers Alps Electric and Nidec closing down 7.1 and 4.9 percent, respectively. Apple shares were hurt by a report by Gartner which showed slowing smartphone sales in China.
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ASX loses 1.4%
Australia's S&P ASX 200 index widened losses to finish at an eight-month low, following China's weak factory data.
Banks were among the biggest decliners for the day, with Australia and New Zealand Banking, Westpac and Commonwealth Bank of Australia down nearly 3 percent each.
Gold producers helped to offset losses, with Kingsgate Consolidated soaring 10.7 percent as spot gold hits its highest level in more than a month in Asian trade. Alacer Gold piled on 6.7 percent, while Newcrest Mining and Evolution Mining tacked on 4.6 and 3.4 percent, respectively.
On the corporate news front, Insurance Australia Group (IAG) tanked 5.2 percent after posting a 41 percent drop in full-year net profit. By contrast, shares of health insurer Medibank outperformed with a 13 percent jump, after delivering a 13 percent rise in underlying net profit in its first year as a listed company, beating analysts' expectations.
Meanwhile, Santos shares finished 0.2 percent lower in choppy trade after the gas producer put itself up for sale. Meanwhile, current managing director and chief executive David Knox announced that he will step down as soon as his replacement is found.
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Kospi skids 2%
South Korea's Kospi index turned further south in the final hour of trade to end at an seven-month trough as news of heightened tensions along the Korean Peninsula dampened already-frail investor sentiment.
"South Korean artillery reply to North Korean rocket marks tensions ratcheting up in the Korean peninsula as Kim Jong Un ordering combat readiness of troops," analysts at Mizuho Bank wrote in a note.
Heavyweight components were sold-off, contributing significant downward pressure on the bourse. Samsung Electronics and Hyundai Motor slumped 3.3 and 2 percent, respectively, while chipmaker SK Hynix lost 3.2 percent.
According to Reuters, losers outnumbered gainers by 8.9 to 1 and all sub-indices ended in negative territory.