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Japan, India shares lead gains in Asia; China data in focus

Asian stock markets were mostly higher on Tuesday, led by a rally in Japanese and Indian shares, as investors welcomed a record Wall Street finish.

The S&P 500 and the Dow hit record closing highs overnight after M&A activity and a rebound in internet and biotechnology shares helped brighten Wall Street's view of the economy.

Asian investors also digested a raft of Chinese economic data, with April industrial output, retail sales and fixed asset investment all coming in below Reuters forecasts. The data follows Monday's reports that showed new bank lending and total social financing weakening last month, confirming signs of a slowdown in the world's second largest economy.

Read MoreA 'new normal' in China: Here's what it means

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ASX 200
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Ukraine developments watched

Separatist leaders in the Luhansk and Donetsk regions of east Ukraine said they may hold a second referendum on joining Russia, similar to the one in Crimea. The region invited Russian troops to lend stability, but Moscow has yet to fully recognize their independence.

Read MoreThe city that may be Ukraine's line in the sand

Nikkei rallies 2%

Japanese shares rose to an over one-week high, trading above its 25-day moving average for the first time since April 25. A weaker yen boosted sentiment as the currency fell to a one-week low at 102.32 per dollar.

Nissan Motor rallied 5 percent despite saying late on Monday that it expects profits to grow at a slower rate than analysts expect this year.

Mitsubishi Chemical jumped over 2 percent after the Nikkei reported that it plans to buy a majority stake in gas manufacturer Taiyo Nippon for $980 million.

Read MoreDoes Japan's current account spell danger for the yen?

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Sensex climbs 1.4%

India's benchmark index rose to fresh record highs for a third consecutive session after four major exit polls on Monday projected a sweeping victory for Narendra Modi's pro-business Bharatiya Janata Party. The index has rallied more than 5 percent so far in May.

Read MoreScenes from the world's largest election

Kospi up 1%

South Korean shares ended at their highest level in over two weeks thanks to strong foreign buying.

Index heavyweight Samsung Electronics jumped nearly 1 percent, extending gains from the previous day's 4 percent rally.

Korea Electric Power Corp eased 0.5 percent despite posting an 87 percent surge in first-quarter operating profit.

ASX gains 1%

Australia's benchmark S&P ASX 200 index also hit a two-week high ahead of the federal budget announcement at 5.30pm SIN/HK. The government expects a deficit of $47 billion in the current fiscal year and traders will be watching to see what deficit-cutting measures will be unveiled.

Read MoreBudget day in Australia: here comes a tax hike

Explosives maker Orica closed down nearly 4 percent after reporting a near 8 percent annual slide in first-half next profit.

Copper miner PanAust soared 34 percent on news that it received an incomplete takeover offer from China's Guangdong Rising Assets Management.

Shanghai slips 0.1%

China's benchmark Shanghai Composite index reversed gains in afternoon trade as investors booked profits on Monday's 2 percent gains.

Commodity stocks that rallied in previous sessions lost ground. Lu'An Environmental Energy and Rare-Earth Group fell 3 percent while China Shenhua fell over 2 percent.

Read MoreChina tensions may have made this market a bargain

The yuan was modestly lower after the central bank guided the currency weaker through its daily reference rate. The move came as U.S. Treasury Secretary Jack Lew said that Beijing should move to a market-based exchange rate.

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