Japanese markets led regional losses as the yen strengthened due to rising expectations of a rate hike at next week's Bank of Japan (BOJ) policy meeting.
The central bank should more clearly show its intention to normalize monetary policy, ruling party heavyweight Toshimitsu Motegi said on Monday as inflation continues to outpace the BOJ's target and wage growth.
Meanwhile, Japan's factory activity contracted slightly in July while the service sector picked up the slack, a business survey showed today.
The manufacturing sector in Japan slipped into contraction territory in July, the latest reading from Jibun Bank revealed on Wednesday with a manufacturing PMI score of 49.2. That's down from 50.0, and it falls beneath that mark that separates expansion from contraction.
The survey also showed that the services PMI improved to 53.9 from 49.4 in June, and the composite index likewise improved to 52.6 from 49.7 a month earlier.
The Nikkei average fell 1.11 percent to 39,154.85 while the broader Topix index settled 1.42 percent lower at 2,793.12.
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