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Japanese shares fell to a six-week low on Monday and the yen strengthened after data showed Japan's economy grew at a slower-than-expected pace in April-June, triggering investors to pare back some of their risk exposure.
Japan, the world's third-largest economy, grew an annualised 2.6% in the second quarter, a third straight quarter of expansion but slower than a downwardly revised 3.8% rate in the first quarter.
"A weaker-than-expected figure triggered investors to become risk-averse, but the gap is minor, so the impact from the GDP data should be short-lived," said Nobuhiko Kuramochi, an economist at Mizuho Securities.
The median forecast was for annualised growth of 3.6%, and so the data may heighten calls to delay a planned sales tax increase given concerns it could delay Japan's escape from deflation.
The Nikkei share average lost 1.2%, falling to its lowest since June 28.
The yen strengthened as much as 0.8% to 95.92 yen to the dollar and hit a six-week high at 127.97 yen to the euro.
The dollar was otherwise steady against a basket of major currencies.
In regional markets, Asian shares as measured by MSCI Asia-Pacific ex-Japan index were little changed, although South Korean shares gained 0.4%.
US stocks fell on Friday, posting their biggest weekly decline since June as investors focused on when the Federal Reserve would begin pull back its massive stimulus.
