China Stocks Sink 2.4% on Growth Concerns

A heavy sell-off in Chinese stocks dragged Asia lower on Monday while an upbeat U.S jobs report prompted worries that the Federal Reserve may wind down its stimulus program later this year.

The Shanghai Composite fell 2.4 percent to a one-week low, Japan's Nikkei fell over 1 percent, South Korea's Kospi hit an eleven-day low and Australian equities inched down 0.7 percent.

Investors now await quarterly earnings from aluminum producer Alcoa, the unofficial bellwether of the U.S earnings season, due later on Monday.

(Read More: A Busy Week Ahead for Asia's Central Banks)

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Jobs Boost

The U.S. economy created 195,000 new jobs in June, the Labor Department reported on Friday, but the upbeat figures fanned fears that the Federal Reserve may scale back its bond-buying later this year, pushing the 10-year Treasury yield to a two-year high.

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.

Kospi Slips 1%

A 3 percent fall in South Korean market heavyweight Samsung Electronics weighed on the broader index as investors worried over the impact of a weaker Japanese currency on exporters' profits.

Shares of Asiana Airlines tanked nearly 6 percent after one of its aircraft's crashed on Saturday in San Francisco, hurting the airline's reputation.

Improved political sentiment capped heavier losses on the Kospi. After talks over the weekend, Pyongyang and Seoul agreed to re-open the Kaesong Industrial park, which has been shut down since April.

Sydney Down 0.7%

Lower metals prices added pressure on Australian resource stocks. Gold miners Perseus Mining and Medusa Mining lost 10 percent each while nickel producer Western Areas fell 7.5 percent after gold extended losses.

(Read More: Strong Jobs Report Is Gold's Nightmare)

A weaker currency further weighed on sentiment, prompting investors to sell offshore funds. The Australian dollar traded at $0.9058, within sight of this month's three-year low.

By's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC