Australia's S&P/ASX 200 was down 0.5%, South Korea's Kospi Composite was shed 1.0% and New Zealand's NZX-50 lost 0.6%. Japan's markets were closed for the Marine Day holiday.
Dow Jones Industrial Average futures were down 88 points in screen trade.
Despite only nine of ninety-one European banks failed the tests conducted by the European Banking Authority, traders are waiting for analysts to run their own tests applying more stringent criteria, including a sovereign debt default by Greece.
Meanwhile, the White House and Republican leaders appeared to have made little progress over the weekend in fashioning a deal to raise the debt ceiling, with only around two weeks left before the U.S. might begin defaulting on its obligations if Congress doesn't act.
"There hasn't been anything to change anyone's (bearish) views," said RBS head of domestic sales trading, Justin Gallagher in Australia.
He noted traders are waiting for the next EU finance ministers' meeting on Greece. "Until things deteriorate further, it seems like they are just going to run around in circles," Gallagher said. "I don't think the market can move past this issue for a while yet."
In Sydney, News Corp., the owner of this newswire, dropped 5.6%, extending Friday's 2.8% fall, after a handful of arrests and resignations over the phone-hacking scandal at its U.K. weekly tabloid News of the World. read News Corp drags Australian stock market
Les Hinton, who headed News Corp.'s News International unit when the allegations first arose, resigned his post as chief executive officer of Dow Jones & Co. Meanwhile, the U.K. capital's top police official resigned Sunday, and the former chief of News Corp.'s U.K. newspaper unit was arrested.
In the wake of the scandal, Austar United Communications dropped 4.1% after The Australian Financial Review reported Monday pay television operator Foxtel's 1.9 billion Australian dollar (US$2 billion) bid for the company could come under scrutiny as part of a move by Australia's influential Greens party for an inquiry into the media.
Santos dropped 4.0% and Eastern Star Gas climbed 40.3% after Santos said Monday it has agreed to acquire the 80% of Eastern Star it doesn't already own in a share-based deal it said values the target at about A$924 million.
BHP Billiton lost 0.9%, extending its 1.6% decline Friday as investors remained cautious after the company said Thursday it plans to acquire Petrohawk Energy for more than $12 billion in cash, or $38.75 per share, a 65% premium to Petrohawk's closing price on Thursday.
In Seoul, shares fell as investors locked in profits after a three-session winning streak, while some large-cap tech shares fell amid lingering concerns over their second-quarter earnings.
LG Electronics shed 1.1%, heavyweight Samsung Electronics lost 2.0% and Hynix Semiconductor shed 2.9%.
In the foreign-exchange markets, the euro and the Australian dollar lost ground against the greenback as risk appetite declined amid continued sovereign debt concerns.
"The stress tests (on 91 European banks) came out and to all intents and purposes on the surface didn't look too bad, but the market is fairly and squarely focused on the risk of sovereign default and the risk of contagion in Europe," said HiFX Trading Director Mike Hollows in New Zealand.
Mr. Hollows said the stress tests made banks account for about 15% of sovereign debt and that puts the focus back on the possibility of a controlled default in Greece or elsewhere. "There are a lot of ifs and buts that run with that," he said.
The single currency was at $1.4065 against the dollar, from $1.4150 late Friday in New York, and at ¥111.13 against the yen, from ¥112.00. The dollar was at ¥78.99, from ¥79.14. The Australian dollar was fetching $1.0596 from $1.0662 in late Sydney trade Friday.
Spot gold was at $1,595.00 per troy ounce, up 90 cents from its New York settlement on Thursday. August Nymex crude oil futures were down two cents at $97.22 per barrel on Globex.
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