Asia Shares Mixed; Japan Closes Higher

Asian shares were mixed on Thursday as investors shrugged off overnight gains in the U.S and turned attention to central bank meetings in Europe. Japan's Nikkei came off a four-and-a-half-year high but held onto most of its gains amid expectations for aggressive monetary easing.

Australia's S&P ASX 200 moved off earlier session peaks, the Nikkei dipped below the 12,000-mark, South Korean shares fell on a strengthening in the won and Greater Chinese markets gave up Wednesday's strong gains.

Markets showed little immediate reaction to the Bank of Japan's (BOJ) decision to leave policy unchanged at Thursday's meeting. Investors widely expected the move and are instead looking ahead to April's meeting for bold stimulus under Haruhiko Kuroda's new leadership.

Global equity markets have had seen stellar gains this week on the back of strong U.S. economic data. Although some analysts warn of volatility ahead. "Even if markets keep the upward trend throughout the course of 2013, the ride would be bumpy as confidence is not completely restored. While the first month of 2013 has not been much 'risk-on and off', the on-off trouble resurfaced in February," said Norman Chan at Calibre Asset Management in a note.

(Read More: Sorry, Stock Pickers—You're Still Getting Crushed)

Nikkei Strong

Tokyo shares came off a four-and-a-half-year peak hit earlier on Thursday but closed higher as the prospects of aggressive monetary stimulus continued to underpin risk appetite.

A weak yen underpinned the Nikkei's rally as the currency briefly hit a one-week low against the U.S. dollar closer to a 33-month trough of 94.7. A weaker yen has lifted Tokyo equities 12 percent so far this year and several analysts told CNBC that they expect the gains to continue.

"Japan has a great deal of upside, I would say up to around 30 percent in the course of this year," said Uwe Parpart of Reorient Financial Markets on CNBC's Cash Flow.

"When you look at the market itself, it's quite cheap on a price-to-book basis. Margins are also very low relative to other markets so we think there's a lot of value in Japanese equities," said Rob Aspin, head of equity investment strategy at Standard Chartered Bank Wealth Management Group.

S&P ASX 200 Retreats

Australia's benchmark pared earlier gains to close lower after hitting 5,135, a four-and-a-half-year high. Shares lost momentum after data showed the nation's trade deficit widened by more than expected in January.

Construction stocks weighed on the index despite data showing construction activity hit its strongest level since 2010, a sharp turn-around for the nation's struggling housing sector. Boart Longyear tumbled over 7 percent, while Leighton Holdings lost 2.6 percent.

Seoul shares fell as a strong Korean won weighed on major technology exporters. Market heavyweight Samsung Electronics fell 2.5 percent, while electronic equipment maker Glostech slumped 4 percent.

The currency rose for a third straight session against the U.S dollar on Thursday, trading within sight of a recent four-month high. A strong won hurts the profits of domestic exporters when their earnings are repatriated.

China Banks Weighs

Investors in Greater China took profits in banking stocks, pushing the Shanghai market down 1 percent.

News that China's money supply increased in January weighed on financial shares. The rise in capital inflows suggests the People's Bank of China will continue draining excess liquidity, leading investors to believe that Beijing has tightened its monetary policy.

Bank of Beijing tumbled 3.5 percent in the mainland whilst China Merchants Bank fell 2.5 percent.