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Tokyo shares lead losses in mixed Asian session

Asian equity markets were mixed on Monday, with data from the world's second largest economy in focus. But volumes in the region were light with Hong Kong, Taiwan and South Korea shut for the Mid-Autumn Festival.

Chinese industrial profits declined 8.8 percent on year in August, their sharpest pace since 2011, according to the National Statistics Bureau. Analysts said the report wasn't surprising given the string of recent weak economic indicators, such as tumbling producer price inflation and factory activity.

"Slowing profit growth in China's midstream sectors is reflective of output price declines deteriorating at a faster pace than the input price. Headline profit growth is unlikely to improve in the short term and the downstream sectors will be affected in the long-run if economic growth continues to slide and drag on consumption. Further fiscal stimulus is expected in Q4 given the weak Q3 performance," noted Yating Xu, economist at IHS Global Insight.

Attention now falls on China's official September purchasing manufacturing managers' index (PMI) and the final Caixin/Markit PMI, both due on Thursday. The reports will be closely watched after Caixin's preliminary reading for September touched a six-and-a-half-year low of 47, well below the key 50-level. Meanwhile, U.S. nonfarm payrolls data for September is expected on Friday.

Investors also continued to react to comments by Federal Reserve Chair Janet Yellen last week. In a speech after the U.S. market close on Thursday, Yellen said she personally anticipated an interest rate hike this year.

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A mixed handover from Wall Street also dampened sentiment in Asia. The Nasdaq Composite closed down 1 percent on Friday, pressured by decline of nearly 5 percent in the iShares Nasdaq Biotechnology ETF (IBB), while the S&P 500 ended flat and the Dow Jones Industrial Average closed up 100 points.

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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Nikkei slips 1.3%

Japanese shares fell as much as 1.5 percent, losing ground after a near 2 percent rally on Friday ahead of Wednesday's Japanese industrial profits data and Thursday's Bank of Japan corporate sentiment survey.

"Japanese markets suffered a severe drag as 1,000 companies went ex-dividend on the Topix, as shares often decline by the expected value of the dividend," added Angus Nicholson, IG market analyst in an afternoon note.

Pharmaceutical stocks tracked declines in their U.S. peers last week; Takeda Pharmaceutical and Sankyo were both 2 percent lower while Daiichi Sankyo lost nearly 4 percent.

Suzuki Motor erased early gains to fall 2 percent after announcing plans on Saturday to sell its 1.5 percent stake in Volkswagen to Porsche. No price tag was revealed but Suzuki says it will post a $304 million special profit from the proceeds.

Shanghai up 0.3%

China's benchmark Shanghai Composite reversed losses to enter positive territory in the final hour of trade. Earlier in the session, the index hit its lowest level in nearly two weeks at 3,042 points.

Banks were among the biggest losers, with Industrial and Commercial Bank of China, Bank of China and Bank of Communications down by more than 1 percent each.

Oil majors PetroChina and Sinopec also fell over 1 percent each, tracking a 1 percent decline in crude oil prices.

ASX up 1.2%

Australia's benchmark S&P ASX 200 closed at its highest level in ten days thanks to a rally in the financial sector.

Australia New Zealand Banking, Commonwealth Bank of Australia, National Australia Bank and Westpac rallied more than 1 percent each while AMP and Macquarie were 2 percent higher.

M2 surged 13 percent following news before the start of trade that the telecommunications firms will merge with rival Vocus to create a A$3 billion company. Shares of the latter tumbled 6 percent however.

Emerging markets lower

Indonesia's Jakarta Composite lost nearly 2 percent to hit a one-month low, down for a fifth straight session, despite local media reports that the government will cut the corporate income tax rate to 18 percent from 25 percent next year.

Meanwhile, Thai shares lost 0.8 percent after August exports declined 6.6 percent on year, down for an eighth straight month.

—CNBC's See Kit Tang and Evelyn Cheng contributed to this report.