"The U.S. earnings report season has disappointed, with 60% of companies missing revenue forecasts so far," Sean Callow, at Westpac Global Strategy group in Sydney said in a note.
China's October flash HSBC manufacturing purchasing managers' index rose to 49.1 compared with a final reading of 47.9 in September.
Given that Australia exports a significant amount of raw materials to China, the Australian dollar rose against the greenback to US$1.0350 from around US$1.0290 before the data. The pair was recently at US$1.0309.
Although the preliminary reading was an improvement over last month's final number, easing some concerns over the health of Asia's largest economy, the index remains in contractionary territory below 50, indicating that manufacturers are still in dire straits.
"External challenges are still abound and pressure on the job market still lingers. This calls for a continuation of policy easing in the coming months to secure a firmer growth recovery," said HSBC China Economist Qu Hongbin.
Hong Kong's Hang Seng Index was off 0.2% while the Shanghai Composite Index in mainland China was down 0.1%.
The Nikkei Stock Average fell 0.3%, with euro-linked exporters broadly weaker as the euro edged lower, extending Tuesday's losses. Canon lost 0.9%, Honda Motor slid 0.7% and Advantest dropped 1.3%.
The single currency was at $1.2982 against the dollar, from $1.2986 late Tuesday in New York, and at Y103.63 against the yen, from Y103.69.
Apple suppliers underperformed after Apple unveiled the iPad Mini Tuesday as investors were concerned with the pricing of the new tablet. Foster Electric dropped 1.2%, Ibiden declined 1.1% in Tokyo, while Hon Hai Precision slipped 0.2% and Pegatron lost 3.0% in Taipei.
Resources plays dragged Australia's S&P/ASX 200 down by 0.7% as global growth worries led to sharp declines in copper, silver and palladium prices Tuesday. BHP Billiton skidded 1.2%, while Fortescue Metals was down 0.8%.
Higher-than-expected third-quarter inflation data also weighed on the Australian market as it dented expectations for an interest rate cut at the Reserve Bank of Australia's November policy meeting.
However, Masashi Murata, senior currency strategist at Brown Brothers Harriman played down the impact of the economic data noting that the figures were within the margin of error. "Focus is more on overseas economic factors rather than domestic factors," he said.
Energy companies were broadly lower after front-month December Nymex crude oil dropped 2.2% Tuesday to close at its lowest level since mid-July. Inpex dropped 1.4% in Tokyo, SK Innovation tumbled 1.9% in Seoul, Woodside Petroleum lost 1.7% in Sydney, and Cnooc slid 2.0% in Hong Kong.
December Nymex crude oil futures were 42 cents higher at $87.09 per barrel on Globex.
SK Hynix outperformed in Seoul after it said it swung to a net profit in the third quarter. Shares rose 3.9%.
South Korea's Kospi Composite fell 0.8%.
In Hong Kong, Esprit plunged 12.2% on share dilution concerns after the company announced a rights issue plan. The struggling fashion retailer plans to raise up to US$677 million in a 1-for-2 rights issue priced at HK$8.00 each, which is below the stock's current trading price around HK$10.92.
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