Japan's Nikkei share average snapped a four-day winning streak on Wednesday, as investors booked profits after the benchmark scaled a 33-year high earlier this week, while a firmer yen and disappointing China data also weighed on markets.
The Nikkei fell 1.41% to 30,887.88 in its biggest daily drop since April 5. It jumped 7% in May to post its biggest monthly gain since November 2020.
The broader Topix slipped 1.32% to 2,130.53.
"Investors were waiting to sell stocks and the yen's strength became a trigger," said Jun Morita, general manager of the research department at Chibagin Asset Management.
"The pace of buying by foreigners seems to be slowing down. Going forward, how much more they will buy domestic shares will be a key."
The dollar retreated overnight after Japan's top currency diplomat said the country would closely watch forex market moves and respond "appropriately" as needed.
The remarks were made after financial authorities met in response to the yen weakening to a six-month low versus the dollar.
Asia's stock markets were on track for a second consecutive monthly drop as weak factory activity figures from China offered the latest evidence that recovery in the world's second-biggest economy is faltering.
Uniqlo brand owner Fast Retailing fell 1.08% and was the biggest drag on the Nikkei. Chip-making equipment maker Tokyo Electron slipped 2% and chip-testing equipment maker Advantest lost 1%.
Toyota subsidiary Hino Motors surged 12.3% after Daimler Truck Holding AG and Toyota Motor struck a preliminary deal to combine their truck units in Japan.
Shares of Toyota slipped 1.62%.
The trading house sector lost 4.46% to become the worst performer among the Tokyo Stock Exchange's 33 industry sub-indexes. Steel makers lost 3.81%.
Insurance and airlines were the only sector that rose, gaining 0.77% and 0.4%, respectively. (Reporting by Junko Fujita; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)