The yen rose to a one-month high against the dollar on Monday (July 29) as investors braced for another round of disappointing economic news out of China, knocking Japanese stocks to four-week lows and pulling down regional markets.

The Nikkei dropped 1.7 percent to 13,886.76 in mid-morning trade after hitting as low as 13,860.16, the lowest level since July 1.

Toyota dropped 2.6 percent and was the most traded stock by turnover, while Honda shed 2.1 percent and Sony fell 2.2 percent after the dollar traded at a four-week low of 97.79 on Monday.

A higher yen tends to make export-reliant Japan's products less competitive in the global market, and lowers the profits when repatriated.

A weak China PMI result will only heighten fears of a hard landing for the world's second largest economy. China is Japan's second major export market.