Asian shares closed marginally higher on Thursday amid caution about the chances of the U.S. going over the "fiscal cliff" but Japan managed to hit a 21-month high as a strong currency buoyed investor risk appetite.
The FTSE CNBC Asia 100 index ended up 0.2 percent.
Japan's Nikkei share average climbed to a 21-month high, led by exporters and banks, boosted by the new Japanese prime minister's vow to battle deflation.
The benchmark index advanced 0.9 percent to 10,322.98, on track to log its best yearly gain since 2005, while the broader Topix gained 0.8 percent to 854 points. It is
Financials such as insurance stocks rose. Dai-ichi Life Insuranceadded 2.0 percent and T&D Holdings gained 3.9 percent
Exporters benefiting from a weaker yen included Nissan Motor, Honda Motor, TDK and Panasonic, all up between 1 and 2.6 percent.
Toyota Motor shares gained 2.6 percent despite agreeing to pay as much as $1.4 billion to settle U.S. litigation over claims that its vehicles suddenly and unintentionally accelerated, according to court filings made public on Wednesday.
Sharp slumped 4.7 percent on news that plan to sell its Nanjing plant in China to Taiwan's Hon Hai Precision Industry has been frozen due to a disagreement on price and other conditions.
Hong Kong shares rose in holiday-thinned trade, led by Chinese growth-sensitive counters as investors caught up on the strong gains mainland markets had during the 2-1/2 day break for Christmas.
Chinese financials and most growth-sensitive sectors led Hong Kong higher as investors chased strong A-shares gains that elevated both the CSI300 and Shanghai Composite Index on Tuesday atop their 200-day moving average.
Gome Electrical jumped 2.2 percent as China's second-largest electronics retailer announced plans to expand in lower-tier cities as part of a three-year plan.
Mainland Chinese shares snapped a three-day winning streak, as investors took profits on financial stocks that had helped lift indexes to their highest since July this week.
The CSI300 of the top Shanghai and Shenzhen listings closed down 0.5 percent at 2,444.6. The Shanghai Composite Index shed 0.6 percent.
China Rongsheng Heavy Industries tumbled 7.4 percent after it warned of an annual net loss for 2012 on sharp declines in orders and prices of new vessels due to the shipping industry's downward turn.
Seoul shares inched up in thin trade, as investor hopes for progress in U.S. fiscal talks offset the effect of stocks going ex-dividend.
The Korea Composite Stock Price Index edged up 0.2 percent to 1,987.3 points.
Select high-dividend stocks still saw steep declines, with mobile carrier KT Corp dropping 5.3 percent and SK Telecom falling 4.1 percent, while Industrial Bank of Korea slipped 2.5 percent
Korea Line shares surged nearly 15 percent after five bidders including SK Shipping and CJ Group entered preliminary bids to acquire management control of the shipper, the Korea Economic Daily reported on Thursday.
Australian shares rose 0.3 percent, following a two-day break from trade, with volumes light as final efforts to avert or at least postpone a U.S. "fiscal cliff" get underway.
The S&P ASX 200 closed up 12.8 points to 4,648 on Thursday.
Fortescue Metals rose 4.1 percent to A$4.53 after announcing it will develop its Kings deposit. The iron ore expansion had been put on hold in September amid a cash crunch.
Retailers rose in light trade after Boxing Day sales. Department store Myer gained 2.9 percent while rival David Jones added 3 percent. Harvey Norman rose 1.6 percent.
New Zealand's benchmark NZX 50 index ended 0.2 percent higher at 4,065.4 points.
India's BSE Index ended down 0.5 percent while the 50-share NSE Index finished 0.6 percent lower.