Earlier in the session, the Democratic Senate twice rejected the Republican-led House of Representatives demands to delay portions of the Obamacare health insurance initiative. Now, the two parties must strike a deal on raising the federal borrowing limit to avoid a debt default by October 17.
(Read more: The final hours before the government shutdown)
Chinese markets are shut until October 7th for the week-long Golden Week holiday, but the government still released the official purchasing manager's index (PMI). The index edged up to 51.1 in September, missing expectations for a 51.5 figure. Still, the data was better than August's reading of 51.
Nikkei up 0.2%
Japan's benchmark index pared gains following an earlier 1 percent spike after Prime Minister Shinzo Abe decided to raise the national sales tax to 8 percent from 5 percent next April. Investors are now expecting a hefty stimulus package worth $50 billion to help mitigate the tax hike impact.
"What we need in Japan more than anything is clarity and trustworthiness of the government. That's exactly what Prime Minister Abe is delivering and that's good news for anybody who has a long-term investment horizon," said Jesper Koll, head of Japanese equity research at JP Morgan Securities Japan.
A weaker currency also lent support as the yen bounced off the previous day's one-month high. Index heavyweight Softbank rose 2.5 percent, chemical producer UBE Industries jumped 5 percent and battery maker GS Yuasa climbed 3 percent.
Stock market gains were also underpinned after sentiment among Japanese big manufacturers improved in the three months to September for a third straight quarter, according to the Bank of Japan's closely-watched Tankan survey.