The Nikkei 225 Stock Average plunged as much as 2% on the growing awareness that the persistent weakness in the yen could support higher inflation and weak consumer spending growth in the long term.
China's retail sales accelerated in May, but industrial production and fixed investment slowed. New home sales and property investment fell sharply, indicating a downturn in the sector may take several months before the market finds its bottom.
The Bank of Japan said it plans to slow the purchase of Japanese government bonds after the July meeting, in a nod to let the market set the long-term rates in Japan after controlling the yield curve for decades.
The Japanese yen approached the record low of recent years, and the Bank of Japan is widely expected to hold interest rates steady on Friday. Business sentiment among large manufacturing companies fell at a slower pace in the second quarter.
The European Union imposed additional tariffs on most electric vehicles imported from China. However, the amount and scope of tariffs were smaller than feared.
Japan's producer price inflation was positive for the 40th month and rose more than 2% in May, stoking fears of a spillover to consumer price inflation.
China's consumer price inflation was positive and steady from the previous month in May, and producer price inflation declined for the 20th month in a row.
Benchmark indexes in Tokyo rebounded for the second day in a row, and the yen weakened ahead of the Bank of Japan's monetary policy decisions on Thursday.
Market indexes in China resumed their slide on the ongoing property market malaise and lack of concrete measures as investors returned from a three-day holiday.
China's trade surplus in May reached a three-month high after exports accelerated and import growth slowed sharply, signaling weak domestic demand. Benchmark indexes in Hong Kong and Shanghai erased weekly gains.
China's statistics bureau is set to report international trade data on Friday, and investors are estimating export growth to accelerate above 5%. Country Garden reported an increase in residential property sales in May from the previous month, but sales were sharply lower from a year ago.
