Asia closes lower on currency concerns

Asia markets fell Thursday after an unexpected drop in U.S. Midwest manufacturing cast doubts on the strength of a global recovery.

Japan's Nikkei 225 and the broader Topix shed 1.5% each on the first trading day of Japan's fiscal second-half. The market was hurt by the yen's strength, which weighed on exporters, and uncertainty over the new government's policies dampened investor confidence.

Bank stocks slid on growing worries about the government's new loan policy. The Nikkei daily reported of a proposed debt relief plan for small and midsized businesses, including a moratorium for loan repayments.

In corporate news, Citi closed the sale of brokerage Nikko Cordial to SMFG. SMFG shares fell 1.9%.

Shares of Honda Motor trimmed losses after its CEO said its first-half results may exceed forecast.

Elpida Memory declined on fears the U.S. may bring up government subsidies received by the chipmaker at the WTO.

Seven & I outperformed the Japanese market. Its shares rose 1.1% after the retailer said it might close nearly 30 supermarkets as part of its restructuring to counter a prolonged sales slump.

South Korea's KOSPI lost 1.7% on concerns over corporate earnings and the impact of a stronger won on the competitiveness of exporters. Tech and auto stocks lost ground, with Samsung down 2.8% and Hyundai Motor tumbling 8%. Shipbuilders also declined on worries of possible order cancellations. Daewoo Shipbuilding lost 4.6%.

The Australian market also ended in the red, with the S&P/ASX 200 losing 0.9%, led by banks and big miners.

On the corporate front, Macquarie will buy Fox-Pitt Kelton for $130 million in a bid to expand the investment bank's presence in North America and Europe.

In Southeast Asia, Malaysia's KLCI rose 0.5% while Singapore's STI fell 0.6%.

Shares of telecom and cable TV provider Starhub plunged 6.5% after rival SingTel won the rights to broadcast English Premier League football on the island.

Markets in Shanghai and Hong Kong were closed for China's National Day holiday.