MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.6 percent.
Japan's Nikkei .N225 added 0.2 percent, shrinking earlier gains as the yen's losses evaporated.
Australian shares slipped 1 percent on their first trading day this week, after minutes of the central bank's April meeting highlighted the balancing act it had to perform between a subdued labor market and escalating household debt in holding rates steady.
The Australian dollar AUD=D4 lost 0.3 percent to trade at $0.7566.
South Korea's KOSPI .KS11 retreated 0.2 percent after U.S. Vice President Mike Pence told business leaders in Seoul that President Donald Trump's administration will review and reform the five-year-old free trade agreement between the two countries.
Pence said the U.S. trade deficit has more than doubled in the five years since the agreement began and that there are too many barriers for U.S. businesses in the country.
The Korean won KRW= was about 0.4 percent weaker, with the dollar at 1,136.9 won.
China's CSI300 index .CSI300 was fractionally higher. Hong Kong's Hang Seng .HSI was down 0.9 percent.
China's hot housing market shook off the impact of the government's tougher cooling measures to rise in March.
Average new home prices in Beijing surged 19 percent from a year earlier, while those in Shanghai soared almost 17 percent, according to the statistics bureau. New home prices across China jumped 11.3 percent from a year earlier, Reuters calculations showed.
Following North Korea's failed missile launch on Sunday, tensions have escalated amid concerns that the isolated state may soon test another nuclear bomb or missile.
Pence warned North Korea on Monday that recent American military strikes in Syria and Afghanistan showed Trump's resolve should not be questioned, but Pyongyang vowed to continue its tests.
While praising China for stepping up efforts to rein in its neighbor and ally, Pence and South Korea's acting president, Hwang Kyo-ahn, said they would proceed with the early deployment to South Korea of the U.S. THAAD missile-defence system, in spite of China's objections.
"It seems the focus is now firmly on future missile tests from North Korea and whether any future tests will actually be successful," Chris Weston, chief market strategist at IG in Melbourne, wrote in a note. "One suspects the concerns in North Korea have further to play out."
Despite these tensions, Wall Street posted its first session of gains in four, as investors turned their attention to first-quarter corporate earnings. Goldman Sachs (GS.N) is among companies due to report this week. All three major indexes .DJI .SPX .IXIC advanced about 0.9 percent overnight.
U.S. housing starts and building permits for March, as well as industrial production, are due later in the session.
The dollar index .DXY, which tracks the greenback against a basket of trade-weighted peers, was little changed at 100.27.
The dollar was also flat at 108.955 yen JPY=.
It hit its lowest level since Nov. 15 on Monday, before closing higher on comments by U.S. Treasury Secretary Steven Mnuchin that he saw the currency's strength over the long term as a positive, although he agreed with Trump's view that it hurts exports in the short term.
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On Tuesday, the dollar was weighed down by worries over North Korea, Mnuchin's comments that the timetable for Trump's promised tax reform is set to falter, and the first round of talks between Japanese Finance Minister and Deputy Prime Minister Taro Aso and Pence later in the day.
Aso said he would discuss a broad framework on bilateral economic cooperation with Pence without going into any details.
"For dollar/yen, the main focus will be on what kind of pressure the United States could apply on Japan as basically U.S. trade policy is linked with a policy for a weaker dollar," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
"The yen cannot simply continue weakening along with higher stocks under such conditions," he said.
The euro EUR=EBS inched up 0.1 percent to $1.0651, extending Monday's 0.25 percent gain.
In commodities, oil prices fell back after earlier gains amid concerns over rising U.S. production and as investors took profits after three straight weeks of gains.
U.S. crude CLc1 lost 0.1 percent to trade at $52.59 a barrel, after falling 1 percent on Monday, its biggest decline in almost a month.
Global benchmark Brent crude LCOc1 also slipped 0.1 percent to $55.32.
Gold XAU= erased earlier losses to trade flat at $1,284.75 an ounce on Tuesday as the dollar waned.
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