The arrest put another layer of cloud over Sino-U.S. trade talks, souring risk sentiment that has already been battered by a flattening of U.S. Treasury yields and slackening global economic growth.

The S&P/ASX 200 index extended losses to a third straight session as it dropped 0.2 percent or 10.70 points to 5,657.7 at the close of trade. The benchmark fell 0.8 percent on Tuesday.

Most sectors ended the day lower, with the metals and mining index slumping 1.2 percent, hurt by weaker metal prices.

BHP Group Ltd, the biggest firm by market value, and Rio Tinto tumbled 1.4 and 2 percent, respectively.

Financial stocks lost 0.6 percent in the session.

Top lender Commonwealth Bank of Australia fell 0.5 percent, while National Australia Bank Ltd slid about 1 percent to its lowest in more than two-weeks.

Meanwhile, New Zealand's benchmark S&P/NZX 50 index dipped 0.3 percent or 23.31 points lower to finish the session at 8,758.220.

Financials and consumer non-cyclicals dragged the index, with NZ listed shares of Australia and New Zealand Bank easing 1.5 percent and heavyweight A2 Milk losing 2.7 percent.