Japanese markets shivered on Monday after a general election cut the ruling coalition's majority, while oil and gold rose on the suicide bombing in Saudi Arabia and fears of more attacks.

Banking stocks dragged the Tokyo market lower on jitters over the prospects for reforms. The Nikkei average closed down 1.2 percent at 10,504.54, prompting a dip in the yen and a rise in Japanese government bonds (JGBs).

MSCI's broadest index of shares elsewhere in the region fell two-thirds of a percent by 0600 GMT on worries stocks had risen faster than economic data warranted. Investors were unnerved by a fall in U.S. stocks despite strong jobs data.

"Foreigners are worried about the outlook for equities in general, given that U.S. stocks dipped even though the unemployment data was good," said Hiroaki Kuramochi, head of global equities at Credit Lyonnais in Tokyo.