Asian stocks were mixed on Monday on mild bargain buying after a sell-off last week.
Central bank meetings in Japan, Malaysia and India this week will be a key factor as policymakers, especially in Mumbai, are seen raising interest rates further to tackle price pressures.
Eyes are also on the U.S. Federal Reserve's Federal Open Market Committee, which will hold a two-day meeting on Tuesday and Wednesday.
Japan's Nikkei average rose on Monday on bargain hunting after a sell-off last week, with investors piling into resource shares and exporters as the mood brightened on hopes for robust earnings news this week.
Bargain hunters chased resource stocks after they tumbled on Friday, with Japan's biggest gas and oil developer Inpex Corp climbing 2.3 percent and the country's biggest commodities trader, Mitsubishi Corp, gaining 1.9 percent.
The Nikkei gained for the first time in three days, ending the session up 0.7 percent. The broader Topix index also added 0.7 percent to 917.18. Volume thinned with many investors on the sidelines ahead of the October-December earnings, with 1.9 billion shares changing hands on the Tokyo Stock Exchange's main board, down from last week's average of 2.15 billion.
Shares of Kirin Holdings rose on reports the Japanese brewer was in talks with China's leading beer company China Resources over a production and sales tie-up. Kirin currently has three plants in Shanghai and sales unit in Beijing.
Fuji Heavy Industries Ltd rose 1.3 percent after the Nikkei business daily said the maker of Subaru-brand vehicles will likely post a group operating profit tripling the previous year's tally and beating earlier estimates.
Honda Motor Co led the advance on the Nikkei, adding 3.8 percent in heavy trade after the Argentine government said on Friday Japan's second-largest car maker will start producing its City model at a new plant in Argentina in March. Nomura Securities also hiked Japan's second-largest automaker's rating to "buy" from "neutral" on stronger-than-expected U.S. sales.
The Bank of Japan also has a two-day policy meeting this week, ending on Tuesday. It is expected to slightly tweak its growth forecasts while keeping monetary policy on hold and sticking to its view that firm demand in Asia will pull the economy out of stagnation in few months' time.
Seoul shares traded flat, with technology plays such as LG Display bouncing, but overriding expectations for Chinese monetary tightening hurt momentum, analysts said.
The Korea Composite Stock Price Index (KOSPI) edged up helped by a bounce in technology issues and crude refiners.
Shares in LG Display rose 3.8 percent despite posting weak earnings late on Friday amid hopes for improvement in the coming quarters.
Airlines and tour issues advanced firmly ahead of Lunar New Year holiday early next month amid expectations of strong overseas travel demand during the period.
Korean Air Line rose 4.1 percent and Asiana Airlines rose 7.1 percent.
Shares in S-Oil rose 4.1 percent and SK Innovation, the country's No.1 crude oil refiner, climbed 4.4 percent.
But declines in bank and insurers weighed, as Woori Finance Holdings and Samsung Life Insurance shed 1 percent.
China Shares Drop on Rate Fears
Shares in Shanghai and Hong Kong fell as investors played safe and pared long positions on fears that Beijing will take more aggressive measures to contain inflation.
Banking shares and resource stocks were among the biggest losers in both centres on concerns that further interest rate increases in China will cool its robust economic growth.
China's key stock index fell 0.7 percent while Hong Kong's Hang Seng index fell for a third successive day, easing 0.3 percent. Turnover was the lowest in three weeks, suggesting investors remained wary but not overly bearish.
Cyclicals, in particular the materials sector, have been hit by profit-taking after getting off to a strong start to the year on hopes that a recovery in the global economy would boost demand for resources. Aluminum producer Chalco fell 1.8 percent, while China Zhongwang Holdings slumped 6.2 percent after warning that profits for 2010 would decline by more than 25 percent. Shipping company China Merchants Holdings fell 2.8 percent, extending last week's 3.1 percent drop.
Most of banks listed on the Shanghai and Shenzhen stock exchange underperformed the index on Monday, with China Construction Bank dropping 1.1 percent and Agricultural Bank of China down 1.2 percent. Industrial and Commercial Bank of China,the world's largest lender by market capitalisation, fell 0.7 percent after it said it would buy Bank of East Asia's U.S. unit.
Keeping investors edgy was a report in official newspaper Securities Times that cited analysts at securities firms saying the week before and after the Lunar New Year was the most sensitive period when the central bank could announce another rate hike. Chinese markets will be shut next week for the Lunar New Year holidays.
Australian stocks rose on Monday boosted by banks on signs inflation data due on Tuesday could be benign and delay the need for further increases in official interest rates.
The benchmark S&P/ASX 200 index gained boosted by financial stocks.
The top four banks all gained over 1 percent, led by ANZ Banking Group , as investors took comfort in data showing lower-than-expected producer prices.
Retailers mostly fell, led by top retailer Woolworths which slid after slashing its full-year profit forecast. The stock suffered its biggest one-day fall in a year after it said consumers were spending less and costs of floods and earthquakes would squeeze margins.
Other retailers also fell, with top department store chain Myer down nearly 2 percent.
Rio Tinto rose after getting a boost for its $3.9 billion takeover offer for Riversdale Mining, as a representative from top shareholder Tata Steel joined the rest of the board in backing the offer.
Karoon Gas Australia tumbled, coming off a two-day trading halt, after it confirmed that its drilling program in the Browse Basin may be delayed as the federal government had subjected the plan to a more rigorous environmental review.
Foster's Group jumped to a two-month closing high after The Sydney Morning Herald newspaper said UK-based brewing giant SABMiller had cleared legal hurdles to potentially making a bid for Foster's beer business. But SABMiller's partner in a joint venture in Australia, Coca-Cola Amatil , fell on the news.
In Greater China, stocks in Shanghai , Hong Kong and Taiwan all traded lower.
The FTSE CNBC Asia 100 index was up 0.26 percent.