• Investors in Asia assessed July pay data out of Japan, which could provide more room to the Bank of Japan for raising rates.
• Average monthly cash earnings in the country rose 3.6% year-on-year, a softer rise compared to the 4.5% climb seen in June.

Asia-Pacific markets closed mixed on Thursday after a sell-off in the previous session, with Japan's Nikkei leading losses in the region.

The Nikkei 225 fell 1.05% to close at 36,657.09, while the broad-based Topix fell 0.48% to end at 2,620.76, after the release of Japan's July wage data.

Average monthly cash earnings in the country rose 3.6% year on year, a softer rise compared to the 4.5% climb seen in June.

Real wages climbed 0.4% year on year, rising for a second straight month after a 1.1% rise in June.

The strong pay report offers the Bank of Japan more room for a rate hike, which could put pressure on equities. Bank of Japan board member Hajime Takata said the central bank "must keep raising rates if it can confirm that companies will continue to increase spending and wages," Reuters reported.

Other economic data coming from the region include retail sales numbers from Singapore.

Separately, Australian telecom operator Optus has received the green light from the country's Competition and Consumer Commission for its proposed regional network and spectrum sharing agreement with rival TPG Telecom.

Optus, which is owned by Singapore's Singtel, announced the agreement in April, after having lobbied against a similar merger between TPG and Telstra, Australia's largest telco.

The Hang Seng index was down 0.24% as of it final hour of trade, while mainland China's CSI 300 rose 0.17% higher to close at 3,257.76.

Shares of some Chinese developers inched higher on optimism that the country was reportedly considering a two-phase reduction in interest rates to shore up its embattled property sector. Hong Kong-listed China Vanke rose over 2%.

On Wednesday, China's financial regulators proposed a reduction in interest rates of up to $5.3 trillion worth on outstanding mortgages to decrease borrowing costs for millions, while easing pressure on its banking sector, Bloomberg reported, citing sources familiar with the matter.

An official from China's central bank said Thursday that there is "certain room" to reduce the required amount of cash that banks need to hold as reserves, while noting "constraints in further cutting deposit and lending rates." The reserve ratio requirement is currently kept at around 7%.

South Korea's Kospi fell 0.21% to close at 2,575.5, while the small cap Kosdaq dropped 0.88% lower at 725.28. Shares of SK Hynix rose nearly 3%. The South Korean chipmaker is set to start mass producing HBM3E 12-layer chips by the end of September, the company's president and head of AI Infra division reportedly said on Wednesday.

Australia's S&P/ASX 200 rose 0.4% to close at 7,982.4. Exports from the country in July rose 0.7% month on month while imports slipped 0.8% compared to last month.

In the U.S., the S&P 500 and the tech-heavy Nasdaq Composite fell for a second straight session, dropping 0.16% and 0.3%, respectively. The Dow Jones Industrial Average edged up 0.09%.

—CNBC's Anniek Bao, Samantha Subin and Sarah Min contributed to this report.