Other Asian markets also fell after a private survey showed that China's factory activity had contracted for the first time in 19 months in December as domestic and export orders continued to weaken.

The news is the latest in a slew of worrying economic data from Southeast Asia's biggest trading partner, reinforcing fears that China's economy is losing more steam amid a bitter trade war with the United States.

Singapore's benchmark index <.STI> shed nearly 1 percent as sentiment was further dampened by preliminary data which showed that the city-state's economy grew 1.6 percent in the fourth quarter from the third on an annualised basis, much slower than expectations.

Shares in industrial conglomerate Jardine Matheson Holdings Ltd were off 1.7 percent, while those in lender Oversea-Chinese Banking Corp dropped 1.6 percent.

Malaysian equities <.KLSE> also dropped sharply, with a 2.3 percent slide each in Sime Darby Plantation Bhd and gas retailer Petronas Dagangan Bhd pulling the benchmark down 0.86 percent.

Meanwhile, Philippine stocks <.PSI>, which suffered the steepest drop in the region during 2018, rose 0.19 percent, paring gains from a 1 percent surge in early trade.

Philippine heavyweight Ayala Land Inc gained 0.7 percent after losing about 4 percent over the two final weeks of 2018.

"Ayala Land fell a lot last week, so it could be bargain-hunting along with the improved sentiment after President Trump said that talks with China are progressing," said Fio Dejesus, an analyst at RCBC Securities in Manila.

The Sino-U.S. trade spat has dominated headlines in Asian markets and U.S. President Donald Trump's Twitter message that he had a "long and very good call" with his Chinese counterpart about trade issues provided some respite to stocks last week.

The real estate sector also powered gains in Vietnamese shares <.VNI>, with Vingroup JSC rising 5.8 percent and Vincom Retail JSC advancing 2.7 percent.

Thai stocks also rose, with the energy and financial sectors underpinning gains. PTT PCL rose 0.5 percent.

(Reporting by Rashmi Ashok in Bengaluru; Editing by Sai Sachin Ravikumar)

By Rashmi Ashok