Asian shares traded mixed early Tuesday, as investors digest an Australian leadership change and await a central bank decision in Japan.

An unimpressive handover from Wall Street also kept a lid on risk appetite.

Major U.S. averages closed down modestly overnight, as investors put off making big bets ahead of the Federal Reserve 's highly-anticipated meeting this week. The Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) and the S&P 500 (CME:Index and Options Market: .INX) declined 0.4 percent each, while the tech-heavy Nasdaq (^IXIC) inched down 0.3 percent.

Mainland indices slide

China's Shanghai Composite (Shanghai Stock Exchange: .SSEC) index declined 1.85 percent, trimming losses slightly after opening down 2.3 percent.

Among China's other indexes, the CSI300 Index — which tracks the largest listed companies in Shanghai and Shenzhen — eased 2.2 percent. The smaller Shenzhen Composite fell 2.5 percent to its lowest level since February 27, while the ChiNext start-up board receded 2.8 percent, extending Monday's 7.5 percent sell-off which took it though the key 2,000 level.

Disappointing economic indicators, such as fixed-asset investment and industrial production, over the weekend suggested further cooling in the world's second-biggest economy that will likely prompt the government to roll out more support measures. However, markets were unconvinced that further stimulus was on the way.

"Normally, expectations of more growth boosting action would lead to demand for smaller and speculative stock, like the ChiNext or Shenzhen Composite Index, but today, market participants were probably not convinced that there will be a big plan in the pipeline," IG's market strategist Bernard Aw wrote in a note.

In other news, Beijing has seized up to 1 trillion yuan (Exchange:CNY=) ($157 billion) from local governments who failed to use their budget allocations , a Reuters report said, as Beijing looks for ways to spend its way out of an economic slowdown.

ASX drops 1%

Australia's S&P ASX 200 (^AXJO) index struggled following a sudden change in the country's leadership, after the ruling Liberal Party voted out Tony Abbott late Monday in favor of longtime rival Malcolm Turnbull.

Meanwhile, the Reserve Bank of Australia (RBA) said the weak economic growth numbers for the second quarter were not a surprise and members noted a number of activity indicators had shown some improvement in recent months, according to the central bank's meeting minutes released Tuesday. The RBA held interest rates unchanged at 2 percent early September.

Losers significantly outnumbered gainers in early trade, with financials leading the way down. National Australia Bank (ASX:NAB-AU) and Australia and New Zealand Bank (ASX:ANZ-AU) plunged more than 1 percent each. Woodside Petroleum (ASX:WPL-AU) retreated 0.8 percent, while Oil Search (ASX:OSH-AU) sagged 2.9 percent.

In early Asian trade, the Australian dollar (Exchange:AUD=) was last seen at a more than two-week high of $0.7160 against the dollar.

Nikkei rises 0.7%

Japan's Nikkei 225 (Nihon Kenzai Shinbun: .N225) index narrowed gains after the Bank of Japan (BOJ) maintained its expansionary monetary policy at an annual pace of 80 trillion yen, as widely expected, in an 8-1 vote.

The central bank also cut its assessment of exports and factory output, saying they are flat. BOJ Governor Haruhiko Kuroda will hold a news conference at 3.30pm local time to explain the policy decision.

Food-related counters underpinned the gains on Tuesday; Itoham Foods Inc (Tokyo Stock Exchange: 2284.T-JP) and Yonekyu (Tokyo Stock Exchange: 2290.T-JP)climbed 2.9 and 8.4 percent respectively, after a report by the Nikkei business daily said both companies are planning an operational merger that would create the country's biggest vendor of ham and sasuage.

Bucking the uptrend, Toshiba (Tokyo Stock Exchange: 6502.T-JP) slumped 2.3 percent from the get-go after the troubled conglomerate reported an April-June operating loss of 10.96 billion yen ($91 million) after the market close on Monday, compared with a 47.7 billion yen profit a year earlier.

Telecommunication operators remained under selling pressure following Monday's local media reports which said that Prime Minister Shinzo Abe has instructed the communication ministry to lower mobile phone fees, but shares managed to trim losses in early trade. SoftBank (Tokyo Stock Exchange: 9984.T-JP) and KDDI (Tokyo Stock Exchange: 9433.T-JP) eased 1.9 and 4.2 percent respectively, while NTT DoCoMo (Tokyo Stock Exchange: 9437.T-JP) turned negative to lose 1 percent.

Fortunately, hefty gains in Fanuc (Tokyo Stock Exchange: 6954.T-JP) and Fast Retailing (Tokyo Stock Exchange: 9983.T-JP) helped to propel the bourse upward. Shares of both index heavyweights rose 2.6 and 1.3 percent respectively.

Kospi flat

South Korea's Kospi index pared early gains to hover in neutral territory by late-morning trade.

Hyundai Motor (Korea Stock Exchange: 538-KR) and Kia Motors (Korea Stock Exchange: 27-KR) advanced 1.3 and 2 percent respectively, but other lagging blue chips capped the bourse's advances. Samsung Electronics (Korea Stock Exchange: 593-KR) ticked down 0.5 percent and Posco (Korea Stock Exchange: 549-KR) sagged 2.4 percent.

Cheil Industries resumed trade after changing its name to Samsung C&T Inc following a merger. The company makes up 2.5 percent of the main bourse's market value, ranking it the fourth biggest company, according to Reuters. Shares of Samsung C&T rose 2.2 percent to 162,000 won (Exchange:KRW=).

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Rest of Asia

Malaysian shares extended gains into a second straight day, up 0.5 percent at a two-week high, thanks to the slew of measures announced on Monday by Prime Minister Najib Razak to support a faltering economy.

Singapore's Straits Times (Singapore Exchange: .FTSTI) index notched down 1 percent, as investors remain on tenterhooks in light of uncertainties over China and the Fed's policy meeting.

On the domestic data front, the second-quarter jobless rate in the Southeast Asian city-state was unchanged from the preliminary estimate of 2.0 percent. Retail sales for July are due later in the day.

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