Nikkei rises 2%
Japan's benchmark Nikkei 225 index extended gains to finish at its highest level in two and a half months, as a weaker yen trading at 123.36 against the U.S. dollar fueled risk appetite.
Banking shares soared following a Nikkei business daily report that Japan's biggest banks plan to announce a reduction target for equities classified as "strategic." Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group piled on more than 4 percent each, while Mizuho Financial closed up 3.1 percent.
Among exporters, Nikon powered up 2.9 percent after delivering a 11 percent jump in its April-September operating profit, beating guidance by 6.5 billion yen.
Air bag maker Takata slipped 0.5 percent at the close, surrendering early gains as much as 12 percent, after heavy selling in the previous trading sessions.
Toshiba slid 7.5 percent after the laptops-to-nuclear power conglomerate said it swung to an operating loss of 79.5 billion yen ($645.66 million) in the three months through September, from a 90.2 billion yen profit a year earlier. The company also said it has sued five former executives over mismanagement that led to a $1.3 billion hole in its accounts.
Read MoreThis week in Asia: China, Japan data will be key
ASX loses 1.8%
Australia's S&P ASX 200 index finished at its lowest level since October 5, as domestic factors dampened trading sentiment, according to IG's chief market strategist Chris Weston.
"I would certainly put [Monday's plunge] down to domestic factors, rather than genuine concern about the Fed starting to normalize policy. There have been many questions asked about domestic companies with BHP Billiton as a key one and the impact on top line growth, as well as the progressive dividend policy in the wake of the tragedy in Brazil. There also seems to be growing concerns around capital city house prices, notably in the wake of another drop in the Sydney and Melbourne auction clearance rates. Real estate investment trusts and banks have found good sellers," the Melbourne-based strategist wrote in a note released on Monday.
Market bellwether BHP Billiton plunged 5.6 percent, tracking a 3.6 percent slide in its U.S. ADRs after a dam at an iron ore mine in Brazil that it partly owns burst last Thursday.
Gold prices lingering near 3-month lows sparked a sell-off among related counters; Evolution Mining and Newcrest Mining plummeted 6.9 and 5.5 percent respectively, while Woodside Petroleum and Oil Search fell 2.5 and 1.1 percent respectively, on the back of a 2 percent drop in crude oil prices last Friday.
Shares of Santos were placed under a trading halt following news that the oil and gas producer plans to sell a 35 percent stake in the Kipper gas field in southeastern Australia to Japan's Mitsui & Co. and raise 3 billion Australian dollars ($2.1 billion) through two share sales on Monday. The Adelaide-based company also said it would raise a further A$500 million by issuing around 73.5 million new shares to a unit of Chinese private-equity firm Hony Capital.
In the banking sector, Australia and New Zealand Banking led declines with a drop of 2.4 percent, while Westpac, Commonwealth Bank of Australia and National Australia Bank closed down between 1.3 and 2.4 percent.
Asciano retreated 2.5 percent on news that Canada's Brookfield Asset Management shelved a $6.5 billion buyout agreement with the port and rail giant.
Kospi drops 0.8%
South Korea's Kospi index settled at a two-and-a-half-week trough, with oil refining and chemical counters struggling amid lower oil prices.
SK Innovation and S-Oil lost 1.7 and 2.7 percent respectively, while LG Chem declined 2.5 percent.
By contrast, Hanmi Pharmaceutical charged up 16 percent, adding to Friday's 30 percent rally, as investors continue to cheer news that the company has entered into a licensing deal with French drugmaker Sanofi last week.
Multi-screen cinema chain CJ GGV tacked on 5.6 percent after announcing upbeat third-quarter earnings last Friday.
JKSE tanks 1.5%
Worries over a possible U.S. rate hike in December prompted investors to take profits, sending Indonesia's benchmark Jakarta Composite index down to a near one-week low amid a fall in the rupiah.
The Indonesian currency fell around 0.7 percent against a solidly-rising U.S. dollar, which got a boost from last Friday's robust U.S. employment data.