Asian equity markets rose on Monday following record closes on Wall Street last week but trading volumes were thin with Japanese markets shut for the Emperor's Birthday.
Higher borrowing costs in China continued to worry investors after the benchmark seven-day repo rate jumped to 9.6 percent. The move came despite news late Friday that the People's Bank of China injected $49 billion into the financial system over a three-day period.
"The issue of tighter interbank liquidity has been a key focus a few times this year and given the seasonality this should not surprise anyone, but with the lack of major weekend newsflow, perhaps this issue has been given greater attention from markets than it would have done otherwise," said Chris Weston, chief market strategist at IG.
(Read more: Don't sweat the spike in China interbank rates)
Shanghai adds 0.2%
Mainland shares rebounded after closing at their lowest level in five months last week. But the benchmark Shanghai Composite continued to trade below it's 200-day simple moving average (SMA) of 2,148 points for a fourth straight session.
Financials led the gains as investors shrugged off the higher money market rates. Bank of China rose 1.5 percent while China Communications Bank rallied over 5 percent.
Property stocks declined on reports that the nation will build 6 million units of public housing next year, in a bid to stem the rise in property prices. Poly Real Estate fell over 1 percent while Vanke closed down 0.8 percent.
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Kospi up 0.7%
South Korea's Kospi closed at its highest levels in two week, within sight of the 2,000 level.
Kia Motors and Hyundai Motor climbed between nearly 2 percent each on news that Hyundai Group will sell three of its financial businesses to reduce debt. The restructuring could raise as much as $3.11 billion.
(Read more: Bespoke cars the must-have for Asia's wealthy)
Sydney 0.2% higher
Australia's benchmark S&P ASX 200 closed at its highest level in three weeks thanks to a rally amid financial stocks.
Commonwealth Bank of Australia, National Australia Bank and Westpac rose 0.8 percent each despite news that the nation's "Big Four" lenders will be required to set aside an extra 1 percent of equity capital.
Gold miners fell as bullion prices hovered near $1,200. Endeavor Mining slumped 10.5 percent while Alacer Gold lost over 7 percent.
Emerging markets mixed
Thailand's benchmark SET tanked over 1.2 percent after anti-government protesters said they would boycott snap-elections.
In India, the Sensex index added 0.1 percent thanks to strong buying from foreign institutional investors. United Spirits fell as much as 3 percent after a regional court annulled the sale of the spirits maker to British firm Diageo.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC