The 10-year US Treasury note yield reached its highest since April 2014 and Japanese government bond yield scaled a 6-1/2 month peak after European bond yields jumped on expectation of an end in the European Central Bank's stimulus. "There are a couple of factors weighing on sentiment. The rise in yields is hard to ignore so that is curbing investor appetite," said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
"Moreover, the investors know there is a lot of earnings and US economic data risk ahead, so the currency markets have some jitters playing into equities." Market participants will keep an eye out for clues on US fiscal policy from a two-day Federal Reserve meeting and earnings from a host of high-profile names including Amazon.com, Alphabet and Facebook. In Southeast Asia, Philippine shares fell 1.6 percent to their lowest close in more than a week, with industrials, real estates and financials weighing the index down.
SM Investments Corp dropped 2.9 percent, while Ayala Corp lost 3.1 percent. Indonesia was also down 1.6 percent at a one-week closing low on broad-based selling. Singapore shares closed down 0.8 percent at their lowest since January 18 as financials and industrials dragged the index lower. Oversea-Chinese Banking Corporation Ltd edged down 1.2 percent, while Jardine Matheson Holdings Ltd lost 1.3 percent.
Thai shares closed 0.6 percent down, weighed down by energy, real estate and financial stocks. Apparel company Thanulux PCL, down 5.5 percent at its lowest close in a week, was the top loser on the Thai index. Malaysia and Vietnam ended flat.