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Asia shares higher after upbeat US data; Iraq tensions eyed

Asian stocks were mostly higher on Tuesday following a mixed morning session but gains were capped as traders continued to monitor developments in Iraq and Ukraine.

Sentiment rose following a raft of positive U.S. data overnight. Existing home sales rose more than expected in May while a preliminary read on June factory activity rose to its highest since 2010.

In Iraq, Sunni tribesman took control of a border crossing between Iraq and Jordan on Monday but it is unclear whether the Islamic State in Iraq and the Levant was behind the move. Speaking after a meeting with Iraqi leader Nuri al-Maliki, U.S. Secretary of State John Kerry pledged "intense and sustained" American support for Iraq to contain the insurgency.

After two months of heavy fighting in Ukraine's east, separatist leaders agreed to a ceasefire with government forces until June 27. The truce runs parallel to a unilateral military ceasefire declared by President Petro Poroshenko last Friday as part of a plan to end the insurgency.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Nikkei flat

Japanese shares reversed losses in afternoon trade, eking out modest gains to hit a new five-month closing high for the second straight session. Focus was on Prime Minister Shinzo Abe's press conference later in the day, where he is expected to discuss the structural reforms of his 'third arrow' strategy, first unveiled last week.

Suntory Beverage rose nearly 3 percent after its parent firm Suntory Holdings announced Takeshi Niinami as its new president, the first leader from outside the founding family.

Real-estate developers unperformed with Mitsui Fudosan falling 2 percent as its newly-issued shares started trading. That sparked sector-wise losses, with Sumitomo Realty and Development down 0.6 percent.

Read MoreIs Bank of Japan at risk of QE failure?

China shares higher

Shanghai stocks gained 0.5 percent following Monday's better-than-expected manufacturing data for June while the yuan was flat against the dollar after hitting a one-month at the end of May.

Liquor makers Kweichow Moutai and Sichuan Swellfun rallied 4 and 10 percent, respectively on media reports that some local governments have introduced policies to support the sector.

Read MoreInvesting in China: A Catch-22?

Meanwhile, Hong Kong stocks recovered 0.4 percent after closing down nearly 2 percent on Monday, the biggest intraday decline in three months.

ASX down 0.4%

Australia's benchmark S&P ASX 200 index extended losses into a second session while the Australian dollar was steady around $0.9422 against the greenback.

Read MoreAustralia economy grapples with new headwind

Clothing retailer Country Road surged 17 percent after South Africa's Woolworths offered to buy out billionaire Solomon Lew's 12 percent stake in the company.

New Zealand's Kathmandu sank 11 percent after the retailer warned of a 15 percent decline in full-year earnings.

Kospi up 1%

South Korean shares posted their best performance in two weeks as investors went bargain hunting among blue-chip stocks following sharp losses in recent sessions.

Samsung Electronics jumped 1.7 percent while LG Display surged 3.5 percent and Hyundai Motor rose 2.3 percent.

Sensex rallies 1.3%

Indian stocks rebounded after ending at their lowest level in over two weeks on Monday.

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