• Investors in Asia assessed dovish comments by U.S. Federal Reserve Chairman Jerome Powell, and rising Middle East tensions as Israel and Hezbollah traded strikes.
• China's central bank will release its medium-term lending rate on Monday, while Singapore will publish its manufacturing data for July.

Asia-Pacific markets were mixed on Monday amid escalating tensions in the Middle East with Israel and Hezbollah trading strikes, while investors assessed dovish comments from U.S. Federal Reserve Chairman Jerome Powell.

Over the weekend, Reuters reported Israel's Air Force struck Hezbollah targets in Lebanon, shortly before the Iran-backed armed group launched over 320 rockets toward Israel.

Hezbollah said this was in retaliation for Israel's assassination of Fuad Shukr, a senior commander, last month. However, the group signaled it was not preparing for more strikes, while Israel's foreign minister said the country did not want a full-scale war, Reuters added.

Oil prices climbed following the strikes, with Brent crude up 0.85% at $79.59 and U.S. West Texas Intermediate rising 0.87% to $75.69.

In Asia, Singapore's manufacturing output surprised economists, climbing 10.1% month on month in July, a sharp reversal from the revised 4.3% decline in June and beating expectations of a 5.3% increase.

On a year-on-year basis, Singapore's manufacturing output climbed 1.8%, beating expectations of a 1.1% decline.

Japan's Nikkei 225 fell 0.66% to 38,110.22, while the Topix lost 0.87% and closed at 2,661.41. The Japanese yen strengthened 0.42% to trade at 143.5, its strongest level since the Aug. 5 stock sell-off.

South Korea's Kospi dropped 0.14% to end at 2,698.01, and the small cap Kosdaq slid 0.84% to 766.79, marking its fourth straight day of losses.

Australia's S&P/ASX 200 gained 0.76% and finished at 8,084.5, just 30 points away from its all-time high.

Hong Kong Hang Seng index rose 1.11% as of its final hour of trade, but the mainland Chinese CSI 300 index inched 0.09% lower and ended at 3,324.22.

On Friday in the U.S., all three major indexes rose after Powell's comments, with the Dow Jones Industrial Average up 1.14%, while the Nasdaq Composite advanced 1.47%. The S&P 500 gained 1.15%.

Powell on Friday signaled cuts to the Federal Funds rate, though he did not reveal the quantum or the exact timing of the reductions.

"The time has come for policy to adjust," the central bank leader said at Jackson Hole, Wyoming. "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."

—CNBC's Alex Harring, Yun Li and Jeff Cox contributed to this report.