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Shares in Japan fell Monday, as investors turned to meetings between Group of Seven finance ministers and central bank chiefs, while in China, shares rallied amid signs that regulators are eager to limit new shares coming to the market.

The Nikkei Stock Average was down 1.1% as disagreement between the U.S. and Japan bubbled over the weekend over whether the latter should be allowed to intervene in the yen's recent rise.

Elsewhere, the Shanghai Composite Index was up 0.5%, the Hang Seng Index was up 0.3% and Australia's S&P ASX 200 was flat. South Korea's Kospi was up 0.3%.

The prospect of higher U.S. interest rates is at the top of investors' list of concerns. Expectations that the Federal Reserve could tighten as early as June had ticked up last week.

But investors in the region are also increasingly monitoring the G-7 meetings this week in Japan. Officials there have yet to come to an agreement on how to address slack in the global economy, for example through coordinated fiscal and monetary policies.

"The market doesn't like an impasse," said Andrew Sullivan, managing director at Haitong International in Hong Kong. "A lot of people are sitting on the sidelines."

Japan shares were getting especially hurt after data from the morning showed that Japanese exports declined 10% in April, accelerating from a 6.8% drop the previous month. It was the seventh-straight month of declines, reflecting the impact of moderating global growth and a stronger yen. Economists surveyed by The Wall Street Journal had expected a 9.1% decrease.

The Japanese yen was last up 0.2% against the U.S. dollar in Asian trading hours.

The Shanghai Composite Index was up 0.5%, as investors monitored regulators' latest stance on the market. China's stock regulator rejected two small firms applying for initial public offerings last Friday—Nanjing Petrochina Hengran Petro-Gas Co. and Jilin Kelong Building Energy-Saving Technology Co.—suggesting that authorities want to limit the supply of new shares that could pressure the market.

Investors in China are also expecting regulators to toughen up on trading suspensions. That has built up expectations for key benchmark provider MSCI Inc. to add Chinese mainland stocks to its widely-tracked indexes. The ability for Chinese firms to self-impose trading suspensions has been a key sticking point for investors opposed to the MSCI including so-called A shares in its indexes.

Energy stocks in the region also fell as oil prices retreated on Friday in New York and during the Asian trading day Monday.

Tokyo-listed Inpex Corp. was off 2.4%. Brent crude oil was last down 0.3% at $48.58 a barrel.

In Hong Kong, the market was up as investors bought up defensive names including utilities and telecom stocks. Shares of China Mobile Ltd. were up 0.8% while Power Assets Holdings Ltd. rose 0.8%.

Takashi Nakamichi in Tokyo and Yifan Xie in Shanghai contributed to this article.

Write to Chao Deng at Chao.Deng@wsj.com

(END) Dow Jones Newswires

May 23, 2016 01:45 ET (05:45 GMT)

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