Chinese shares continue to fall

Chinese shares continued to slide, leading the rest of Asia lower

Chinese shares continued to head lower on Tuesday, extending the previous session's losses.

On the mainland, the Shanghai Composite benchmark closed down 3.52% at 3,005.17 points.

Hong Kong's Hang Seng index closed down 0.49% at 21,455.23 points.

Investors ignored government data that showed that Beijing boosted fiscal spending by 26% in August from a year ago.

The move was an attempt to aid the flagging economy.

Regulators also tried to ease fears that the most recent crackdown on margin financing - a type of lending which involves borrowing money to buy stocks - would not affect the market.

Amid ongoing volatility in the markets however regulators have moved to punish some of the country's big brokerages for not verifying trading accounts properly.

Overall caution has set in, with many investors remaining on the sidelines ahead of the US Federal Reserve's decision on whether to raise interest rates for the first time in nearly a decade later this week.

Nikkei gain

Shares in Japan headed higher despite a survey indicating that manufacturers' confidence fell the most in a year this month.

The Reuters Tankan - which closely tracks the Bank of Japan's quarterly Tankan survey - showed slumping morale among businesses.

Meanwhile, the central bank kept its monetary policy unchanged, as widely expected, but warned about exports and production being hit by slowing demand.

The Nikkei index closed up 0.3% to 18,026.48 - the first gain for four trading days.

Australian shares headed lower as investors turned cautious after the country appointed a new prime minister on Tuesday.

A Liberal Party vote resulted in Malcolm Turnbull ousting Tony Abbott to take the top job, potentially ending months of policy turmoil in Canberra.

The S&P/ASX 200 index ended down 1.5% at 5,018.40. The benchmark index has lost more than 10% since last month.

In South Korea, the benchmark Kospi index dropped 0.3% to 1,973.56.