Asian equities higher as China credit fears ease; Nikkei leads gains
Asian stocks rose on Tuesday as fears over a credit squeeze in China eased but trading volumes were thin in the absence of a lead from Wall Street overnight.
U.S. equity markets were closed for the 'Martin Luther King Jr Day' holiday on Monday.
Nikkei rises 1%
Japan's benchmark index snapped a 3-day losing streak to rebound from the previous day's one-week low as the dollar-yen approached the key 105 level. The declining currency propelled large-cap stocks higher; Fast Retailing gained 3 percent and Sharp closed 4.4 percent higher
Attention remains squarely on the Bank of Japan's policy meeting on Tuesday. Most analysts agree that the bank is unlikely to expand its asset purchase program, with some pinpointing April for a move, and others looking further ahead to October.
(Read more: Japan-China tensions: How bad will it get?)
Also helping sentiment were comments from Economics Minister Akira Amari, who said the economy seemed to have escaped from deflation.
Shanghai gains 0.9%
Mainland shares rebounded from the previous day's six-month low after the People's Bank of China (PBOC) injected funds into the market in early trade. The move follows Monday's decision to provide cash directly to banks through a short-term lending facility (SLF).
As a result, short-term money market rates eased, with the 7-day repurchase rate at 5.6 percent, down from the previous day's 6 percent high. Financials gained, with Founder Securities rallying nearly 5 percent and Haitong Securities 2.5 percent higher.
Property stocks extended previous day's rally with Shanghai Shimao 2.8 percent higher and Poly Real Estate up 1.3 percent after data on Monday showed that total property sales rose 26.3 percent in 2013, an annual 10 percent gain.
Australia adds 0.7%
Australia shares reversed morning losses to close at a two-week high, thanks to support from banks. Australia and New Zealand Bank (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Macquarie gained around 1 percent each.
However, larger gains were capped by lower metal prices. Fortescue Metals was the hardest hit, down 4.6 percent while Atlas Iron slipped 4 percent.
Australia's largest carbon project developer CO2 rose nearly 2 percent despite the resignation of its group CEO, Andrew Grant.
(Read more: China's shadow banking reform faces its first test)
Kospi up 0.5%
South Korea's benchmark index rose after data showed exports for the first 20 days of January rose by 5.8 percent from a year earlier.
Sentiment also rose after a ministry official said net foreign investment in domestic bonds would likely rise for the first time in six months by the end of January.
Emerging markets higher
Thai stocks halted a 2-day losing streak to rally 1 percent despite continued political unrest while the baht steadied around 32.8 per dollar.
(Read more: To cut or not cut? Thailand mulls rate move)
Meanwhile in India, the benchmark S&P Sensex index was little changed at 21,208.
— By CNBC.com's Tang See Kit.