The eurozone crisis once again took center stage after Spanish benchmark 10-year bond yields soared to the all-time high of 6 percent on Friday before settling at 5.97 percent. The move came after data showed that the country's banks are relying more on the European Central Bank funding.
Further pressure on Spanish bond spreads is likely especially as it has become clear that the country's banks are relying more on European Central Bank funding. In turn this could force the ECB's hand to restart its program of Securities Market Purchases but the impact may not be so potent this time around, a note from Credit Agricole said.
In Japan, Nikkei plunged 1.74 percent, led by declines from financial and exporter companies' shares as fears over the eurozone debt crisis weighed.
Among the exporters, carmaker Toyota Motors declined 1.65 percent and Honda Motor Co fell 1.95 percent while digital camera maker Canon Inc plunged 2.37 percent.
Among the financials, Mitsubishi UFJ Financial Group plunged 3.48 percent and Sumitomo Mitsui Financial Group declined 3.04 percent while Mizuho Financial Group slipped 3.05 percent.
In Hong Kong, Airlines and steel maker companies' shares led the decline after issued profit warnings last week. Benchmark Hang Seng fell 0.44 percent or 90.40 points to 20,610.64.
China Eastern Airlines Corp Ltd dropped 4.9 percent and China Southern Airlines Co Ltd fell 2.8 percent after warning that first-quarter profit probably fell more than 50 percent due to slowing economy and higher fuel prices.
China's biggest metal producer Jiangxi Copper declined 0.85 percent and Angang Steel plunged 2.75 percent in Hong Kong.
Chinese Shanghai composite declined 0.09 percent or 2.13 points to 2,357.03. The People's Bank of China (PBoC) announced over the weekend that it is doubling the daily trading band for the Chinese yuan (CNY) against the US dollar (USD) to ±1 percent from ±0.5 percent, effective April 16, 2012.
However, the move which is largely seen as a positive step for Chinese markets was overshadowed by resurfaced euro-zone debt worries.
In India, stock markets recovered from losses and ended with gains on hopes that the Reserve Bank of India's (RBI) might cut interest rates for the first time in three years. The RBI is expected to cut the repo rate in the annual credit policy that will be announced Tuesday, in order to ease constraints on lending and in a response to the continued shortage of liquidity in the banking sector faced with a slow moving economy.
The benchmark BSE Sensex gained 0.33 percent or 56.44 points to 17,150.95. The 50 share NSE Nifty advanced 0.36 percent or 18.75 points to 5,226.20.