Asian Shares Mostly Lower

Asian stocks were mostly lower on Tuesday, as a stronger yen weighed on the Japanese market, while the Reserve Bank of Australia's decision to keep interest rates unchanged lifted the Sydney market.

Japan's Nikkei Stock Average was down 1.1% after dropping by as much as 2.7% in early trading, falling to its lowest level since March 6 amid a stronger yen.

"The selloff is more due to the strong yen than an overheated market per se," said Tatsunori Kawai, Chief Strategist at kabu.com. "Heading into (fiscal year) end earnings reporting season, investors are looking for the dollar to hold around at least the �95 mark. The Nikkei could keep correcting to the 11,300 level within the month if this doesn't happen."

Japanese exporters were lower with technology stocks bearing the brunt of selling. Nikon dropped 3.2%, Canon lost 1.9% and Tokyo Electron slid 3.7%.

The yen strengthened against the U.S. dollar in the lead up to the Bank of Japan's much-anticipated policy meeting later this week as investors speculated about whether or not the central bank will be able to meet the market's easing expectations.

Prime Minister Shinzo Abe acknowledged Tuesday the Bank of Japan's challenge in achieving a 2.0% price rise target in two years.

"We aren't calling on the BOJ to act recklessly," Mr. Abe told a parliamentary committee. "Since the economy has a life of its own and nobody can predict what will happen in the future, there may be cases" in which the BOJ can't achieve the target.

The dollar fell below �93.00 in early trading for the first time since March 6, and was recently at �93.13 compared with �93.21 late Monday in New York.

In Sydney, the S&P/ASX 200 was up 0.4%, as investors digested the Reserve Bank of Australia's policy decision. The RBA left its benchmark cash rate target at 3.0% for the third-straight month, signaling confidence a yearlong string of cuts is reviving activity across the economy.

"There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy," Gov. Glenn Stevens said Tuesday. "Further such effects can be expected to emerge over time."

The Australian dollar strengthened after the RBA's announcement, at US$1.0465 compared with US$1.0422 late Monday in New York.

Chinese markets edged lower, with many investors staying on the sidelines ahead of key first quarter economic data out of the mainland next week, and with the current trading week cut short by holidays.

Hong Kong was shut on Monday for a holiday and will close Thursday for another, while mainland markets will break from Thursday and reopen next week.

The Hang Seng Index was up 0.3%, while the Shanghai Composite Index fell 0.3%.

Pharmaceutical stocks fell in China on fears that government drug price reforms might cut into profits of drug distributors. Shanghai Fosun Pharmaceutical fell 3.3% and Guangzhou Pharmaceutical Company lost 2.8%.

South Korea's Kospi Composite was down 0.5%.

Write to John Phillips at john.phillips@wsj.com