U.S. government employment in June grew the most in 10 months, as overall non-farm payrolls increased by 224,000 jobs. In contrast, only 72,000 jobs were added in May.

After the strong payrolls report, there are some concerns that Fed Chair Jerome Powell may not be as aggressive as the market had expected on rate cuts, said Stephen Innes, managing partner at Vanguard Markets, in a note to clients.

Hopes of sharp rate cuts by the Fed in the face of stumbling economic data, especially under the weight of multiple tariff tiffs that the United States has been involved in, have helped markets retain their sheen over the last few months.

Morgan Stanley's decision to reduce its global equities exposure also soured investor mood.

"The market is too optimistic on 2019 earnings and is underestimating the pressure from inventories, labour costs and trade uncertainty," Morgan Stanley said in a research note.

Singapore stocks <.STI> fell the most in Southeast Asia, weighed down by industrials and financials. The benchmark stock index logged its biggest percentage drop in almost two months.

Conglomerate Jardine Matheson Holdings Ltd dropped 1.5%, while lender DBS Group Holdings Ltd lost 1%.

Philippine shares <.PSI> ended 0.8% lower, with index heavyweights SM Prime Holdings Inc and SM Investments Corp shedding 1.2% and 2.3%.

Indonesian shares <.JKSE> lost 0.3%, dragged by consumer and financial stocks.

Cigarette maker PT Hanjaya Mandala Sampoerna Tbk was down 2.8%, while lender Bank Central Asia Tbk PT ended 1.5% lower.

Thai shares closed flat after the central bank chief expressed confidence in the economy.

The economy's relative strength in comparison to peers in the region has driven strong capital inflows so far this year.

Foreign investors have purchased a net $1.69 billion worth of Thai equities so far this year.

(Reporting by Soumyajit Saha, Additional reporting by Gaurav Dogra; Editing by Subhranshu Sahu)

By Soumyajit Saha