Shanghai Falls 2.4%
News that Beijing will no longer extend credit to sectors that struggle with overcapacity spooked mainland investors and led to steep declines in property and banks. Developer Shanghai Shimao lost 4.6 percent while Bank of Nanjing fell 3 percent.
"Chinese growth is once again being called into question... the market is thinking longer term and how a reduction in credit growth north of $100 billion will impact the economy," said Chris Weston, chief market strategist, IG in a note.
Shares of China's largest gold miner Zijin Mining Yunnan Tin declined over 4 percent after warning of a 45 to 55 percent decline in first half profit.
Nikkei Declines 1.4%
Japanese stocks were unable to hold onto opening gains as dollar-yen traded below the 101 handle, leading the benchmark index to fall off an earlier five-week high of 14,497 points.
Construction firms led the losses with Daiwa House Industry diving over 9 percent after announcing that it would raise over $1 billion by issuing 60 million new shares and selling 20 million of its own. Homebuilder Sekisui House was lower by 3.7 percent.
Strong economic data helped to bolster sentiment. Bank lending hit a four-year high in June as investment demand rose on the back of the central bank's aggressive stimulus program.