Shanghai leads Asia higher on China GDP relief

Asian stocks were modestly higher on Monday as investors breathed a sigh relief after China's latest second-quarter growth figures matched market expectations.

The Shanghai Composite outperformed to rally 1 percent, Hong Kong stocks pared gains to trade flat while both Australia's S&P ASX 200 and South Korea's Kospi reversed earlier losses to close in positive territory.

Light trading volumes capped gains with Japanese financial markets shut for a public holiday.

(Read more: Why aren't markets rallying over China's GDP?)

China at center stage

China's annual economic growth slowed to 7.5 percent in the second quarter of 2013 from 7.7 percent, marking the slowest pace of growth (year-on-year) since the third quarter of last year. Many traders were braced for a figure below 7.5 percent following a slew of disappointing trade and manufacturing data.

"This is the first time we've seen some degree of stabilization but where growth ends up is anyone's bet. Who knows if the 7.5 percent growth rate is sustainable," said Simon Warner, head of macro markets at AMP Capital.

(Read more: Will a job market scare push Beijing to act?)

Other data released at the same time showed June industrial output rose 8.9 percent from a year earlier, a touch lower than Reuters' estimates for a 9.1 percent increase. Meanwhile, June retail sales came in better-than-expected from a year earlier.

Shanghai up 1%

China's benchmark stock index rebounded following Friday's 1.6 percent tumble, led by a rally in brokerages. News that the intra-day trade of A-shares in Hong Kong would be resumed helped Founder Securities jump over 6 percent and Haitong Securities add 4 percent. Such a move would boost transaction volumes and benefit brokerages' fee incomes.

Also underpinning gains were supportive comments from China's central bank over the weekend. The People's Bank of China (PBOC) said that it would use a mix of policy tools to tweak liquidity and keep credit growth steady.

The benchmark index traded within range of Friday's three-week high of 2,092.

(Read More: China, Bernanke in focus for Asia markets)

Meanwhile, Hong Kong shares traded in a narrow range between 21,385 points and 21,228 points. Industrial stocks led the gains with steel firm CITIC Pacific and terminal operator COSCO Pacific climbing 2 percent each.

Sydney 0.1% higher

Australian resource stocks led the index higher. Gindalbie Metals jumped 22 percent following a rise in metals prices. Gold, silver, platinum and palladium all climbed higher after China's data release.

"Any chance you can get to trim out of any profits is our general feeling for Australian material stocks," said George Boubouras, CIO of Equity Trustees, speaking ahead of production output figures from major resource firms, due this week.

(Read more: Pros: Emerging markets look cheap, but still plenty risky)

The Australian dollar rose above 91 U.S. cents to hit a session high of $0.9121 after China's GDP data, moving off Friday's three-year low against the greenback.

The index closed just 31 points shy of Friday's seven-week high of 5,012 points.

Kospi adds 0.3%

South Korea's benchmark index reversed earlier losses to enter positive territory after China's data release. The mainland is Seoul's top export destination and heavy industry companies were the most sensitive to the data.

Marine transportation firm Korea Line rallied 15 percent while shipbuilder Hyundai Heavy jumped 3 percent.

— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC