Tokyo's Nikkei 225 Average ended down nearly 0.8 percent, dragged lower as investors locked in profits on property firms after Credit Suisse downgraded the sector. But trading houses such as Mitsubishi Corp, which were at or near year-highs, were buoyed by strong commodity prices. Yahoo Japan tumbled almost 4 percent after Reuters reported that, according to a person familiar with the talks, Microsoft has proposed to buy Yahoo's search business, but not Yahoo's stake in Yahoo Japan.
Fast Retailing and other retailers slipped as investors switched funds to blue-chips amid growing concerns about consumption in the face of oil prices near record highs.
But steelmakers were bought after Nippon Steel said it expects customers to let it hike prices by more than a third.
The Bank of Japan left interest rates unchanged at 0.5 percent, as expected, opting to take more time to determine when the fog will clear from the economy – both in Japan and around the world.
South Korea's KOSPI closed 0.6 percent lower, weighed down by declines in banks such as Shinhan Financial and Kookmin Bank. Financials were hurt by news that finance ministry is keeping an eye on rising offshore bank borrowing, which triggered worries over potential restrictions on short-term offshore borrowing. Techs including Hynix Semiconductor were also down,after Hynix's China DRAM plant was hit by power outage on Monday, disrupting output.
Australian shares were 0.7 percent weaker at the market close, with Macquarie Group sliding on downbeat earnings and outlook, while falls in base metals prices dented the miners. Macquarie, Australia's top investment bank, fell as much as 2.6 percent after it posted a 1.4 percent rise in second-half profit and said it would be challenging to repeat its record year profit this year. Fund managers said that Macquarie's cautious outlook underscored concerns that the financial sector will continue to face a rough ride ahead as banks struggle with rising bad debts amid the global credit squeeze.
Hong Kong stocks ended the day 2.2 percent lower despite a positive start. Shares in Asia Cement staged a strong debut amid optimism that reconstruction work in China's quake-hit areas will boost demand for building materials such as cement. Asia Cement shares jumped 62 percent to open at HK$8. But this wasn't enough to offset loss in stocks such as China National Building Material, which fell over 6 percent after Citigroup downgraded the stock to sell from hold on profit fears.
Shares in China Unicom also tumbled. The mobile operator said subscribers to its GSM cellular service rose to 125.434 million in April from 124.225 million in March, while CDMA service subscribers rose to 43.098 million in April from 42.809 million in March.
Singapore's Straits Times Index ended lower with financials such as DBS Group leading the declines.
China's Shanghai Composite Index sold off by 4.5 percent, led by bank shares, as investors worried that last week's devastating earthquake in Sichuan province may increase the risk of inflation exceeding expectations in May and possibly in June.