Asian shares traded mixed on Thursday, with Japan's Nikkei 225 index lagging behind its regional peers after returning from a three-day national holiday earlier in the week.
The triple whammy of an uninspiring lead from Wall Street overnight, a modestly stronger yen and lackluster manufacturing activity out of Japan likely added to the nervousness of traders in Tokyo.
The Markit/Nikkei Japan flash manufacturing purchasing managers index (PMI) stood at 50.9 in September from a final 51.7 in August, data released on Thursday showed. The index remained above the 50 threshold that separates expansion from contraction for the fifth straight month, but fell for the first time in three months.
Major U.S. averages closed down slightly overnight, with materials shares among the hardest-hit for the second session as bleak factory activity data out of the world's top two economies added to growth fears.
China's flash Caixin PMI for September fell to a six-and-a-half-year low of 47.0 in September. Growth in the U.S. manufacturing sector showed no on-month change during September, staying at August's sluggish pace of 53, which was the weakest in almost two years, according to Markit's preliminary U.S. manufacturing PMI for September.
Nikkei skids 2.8%
The Nikkei index at the Tokyo Stock Exchange widened losses in the final hour of trading to finish at a fresh two-week low of 17,571.8.
Auto stocks were among the biggest laggards, as they reacted to news that Volkswagen cheated on U.S. vehicle emissions tests. Toyota Motor slid 1.9 percent, while Nissan, Suzuki Motor and Honda slid between 2.2 and 4.1 percent.
Mizuho Financial led losses within the banking sector with a 2.2 percent slump, while Nomura Holdings, which said it could incur 34.5 billion yen ($287 million) loss in the second quarter in relation to a settlement with Monte dei Paschi di Siena, lost 3.2 percent.
Bucking the downtrend, Oracle Corporation Japan surged 3.4 percent, lifted by strong earnings by its parent company for the June-August quarter.
Mainland mostly higher
China's share markets steadily widened gains in the afternoon trading session, with the Shanghai Composite index closing up 0.9 percent.
However, weakness in the blue chips limited the bourse's advances. Bank of China ticked down 0.3 percent, while China Vanke slipped 0.5 percent. China Merchants Property tumbled by the daily maximum allowable of 10 percent on its first day of trade following a restructuring that made it the country's biggest listed developer.
Among other indexes, the benchmark CSI300 Index notched up 0.7 percent, while the Shenzhen Composite bounced up 1.2 percent in relatively muted trade.
In Hong Kong, the Hang Seng index remained on the back foot, down nearly 1 percent to a two-week low, with financials and energy stocks leading the declines.
Clothing retailer Esprit, which swung to a loss for the year ended June, gave up early gains to tumble 1.6 percent.
ASX rises 1.2%
Australia's S&P ASX 200 index recouped more than half of Wednesday's losses to bounce back above the 5,000 mark, but analysts say the rally could be short-lived as concerns regarding growth lingered.
"With the Chinese and Australian economies slowing, and the global commodities market still in the doldrums, there are significant risks that the ASX could dip below 5000 for a far more extended period," IG's market analyst Angus Nicholson wrote in a note.
Major lenders led the charge after being heavily sold-off in the previous session; National Australia Bank led gains with a rise of 1.2 percent, while Westpac, Commonwealth Bank of Australia and Australia and New Zealand Banking elevated between 0.9 and 1.1 percent.
The Australian dollar fluctuated around 70 U.S. cents in Asian trade, holding near a year-to-date loss of 14 percent.
According to Kathy Lien, managing director of FX strategy for BK Asset Management, worries that a slower-growing China could take a toll on key parts of the Australian economy such as mining, plus the long rout in commodities prices and a strengthening dollar are the bearish factors keeping a lid on the Aussie.
Kospi adds 0.1%
South Korea's Kospi index narrowed gains to hover near Wednesday's one-week low.
Automotive parts supplier Hyundai Mobis rallied 0.9 percent, thanks to plans for share buybacks. Logistics company Hyundai Glovis surged 4.3 percent, while Hyundai Motor gained 0.6 percent on the back of expectations that the ongoing probe into Volkswagen's emissions-cheating scandal will deliver a boost to local carmakers.
Shares of Kia Motors erased early gains to close flat.
Stationery maker Monami soared 3 percent, adding on to gains of nearly 30 percent from Wednesday following news that the company is launching a new writing utensil.
Policymakers in the Philippines and Taiwan are due to announce their policy decision later in the day.
According to Moody's Analytics, the Bangko Sentral ng Pilipinas (BSP) will likely be "comfortably on hold," keeping its benchmark interest rates unchanged at 4 percent.
"The outlook has improved with public spending programs getting under way. The Philippines also has its booming and relatively stable services sector, specifically the strong performing business process outsourcing industry to fall back on," Sydney-based Moody's economist Katrina Ell wrote in a note issued Wednesday.
Ahead of the decision, the PSE Composite Index fell 0.9 percent to its lowest level since September 8.
By contrast, calls are heightening for Taiwan's central bank to unveil a rate cut at its quarterly meeting on Thursday, after having kept its policy interest rate at 1.875 percent since 2011.
"The recent string of poor data from Taiwan has raised concerns that external demand will remain sluggish. We now see a 60 percent chance of a 12.5 basis-point cut in the discount rate at the September meeting," Societe Generale economist Claire Huang wrote in a note Friday.
Taiwan's weighted index surrendered gains to finish 0.9 percent lower at a two-week trough.
Large-cap Taiwan Semiconductor Manufacturing Co. (TSMC) outperformed the bourse with a rise of 2 percent after it announced a higher guidance for third-quarter revenue.
Meanwhile, markets in Singapore, Malaysia and Indonesia are closed for the Hari Raya Haji holiday.
— CNBC's Evelyn Cheng contributed to this report