Asian shares hit by double blow of China PMI, taper; Nikkei outperforms
Japanese shares outperformed on Thursday thanks to a weaker yen, while the rest of Asian equity markets fell on fears of a reduction in U.S. stimulus and weak Chinese manufacturing data.
Minutes from the Federal Reserve's October policy meeting showed officials believed economic conditions would pave the way for a reduction in asset purchases in coming months.
(Read more: Confused about Fed tapering? Don't be)
"The price action in equities, Treasurys and currencies suggests that there was a major shift or revelation by the Fed but in reality the minutes contained very little surprises and did not say anything that we had not all already known," said Kathy Lien, managing director at BK Asset Management in a note.
Meanwhile, HSBC's China flash purchasing manager's index (PMI) for November fell to 50.4 from a seven-month high of 50.9 in October, sparking doubts about the sustainability of the mainland's economic recovery.
Nikkei soars 1.9%
Japan's benchmark Nikkei ended at its highest level since May 22 as dollar-yen hit a four-month high at the 100.7 level. Risk appetite rose after the government's pension fund, the world's largest, said it would invest more into riskier assets. Sentiment also rose after foreign buying hit a seven month high last week.
Markets were little changed after the Bank of Japan left monetary policy steady at the conclusion of its two-day meeting.
Mainland shares fell off the previous day's one-month closing high after HSBC's disappointing November flash PMI figure. Still, the index pared gains following an earlier 1 percent decline.
"We need to realize that this PMI data is coming at a period when we've been having rising rates domestically in China as we went into the Third Plenum. The yuan's been firm over the last month so export orders dipping back is probably a reflection of that," said Timothy Riddell, Head of Global Markets Research, Asia at ANZ.
Financials bore the brunt of losses. New China Life Insurance fell 3.1 percent after Zurich Insurance announced it will be selling all its remaining shares in the firm for $943 million. That sparked a sell-off in other insurers with China Ping An and China Pacific over 2 percent lower.
Kospi down 1.4%
South Korean equities ended at a one-week low, extending losses for a second session as large cap tech stocks were sold off on the back of a weaker yen, which hurts the competitive advantage of domestic exporters.
(Read more: And we're off: the 'Great Rotation' gets into gear)
Sydney 0.3% lower
Australia's S&P ASX 200 fell to its lowest level in over a month for a second straight session.
Gold miners dragged on the index after bullion prices traded near a four-month low. Evolution Mining fell nearly 9 percent while Kingsgate Consolidated and Alacer Gold skidded 6 percent each.
BHP Billiton was little changed after its chairman said the global miner will be reducing capital expenditure by 25 percent for the 2014 financial year at the firm's annual meeting.
Emerging market sell-off
Thai and Indian shares lost around 2 percent each on fears of a looming reduction in U.S. monetary stimulus while Philippine stocks ended 0.5 percent lower.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter