Trade in Asia was subdued on the last day of the first quarter as sentiment improved after Wall Street posted a record close overnight and fears over Cyprus receded, but financial stocks in China extended losses.
Markets in Australia, Hong Kong, the United States and most of Europe are closed for the Easter holidays and will resume trade next week.
For the quarter, the Nikkei is Asia's best performer, up 19 percent with Australia in second place with a gain of 7 percent.
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Investors are awaiting China's official purchasing managers index (PMI) for the month of March, due Monday. A Reuters poll of 13 respondents showed that factory activity will likely hit an eleven-month high of 52 after February's five-month low of 50.1. Any increase from February's reading will bolster the case that China's economic recovery is gathering pace.
Sluggish industrial output and falling prices capped gains in the Nikkei, and further highlighted the need for bold stimulus measures by the central bank to achieve a target of 2 percent inflation.
The benchmark index is down 2 percent since last week's four-and-a-half-year peak.
"I expect CPI [consumer price index] number to recover from the current level, but it may take at least four years to meet the target of 2 percent," said Junko Nishioka, chief Japan economist at RBS.
(Read More: How Distant Is Japan's 2% Inflation Target?)
Investors are expecting the Bank of Japan to expand monetary easing measures at next week's highly-anticipated policy meeting, which could mark a return of risk appetite.
Meanwhile, the yen strengthened to 94 per dollar as investors rushed into the save haven unit on concerns over Europe. The currency is set to post a 8 percent fall for the quarter, supported by Prime Minister Shinzo Abe's pledge to battle deflation.
Shanghai Pares Gains
Shares in the mainland cut losses after hitting a three-month low of 2,228 points earlier in the session.
Among the most traded stocks on the Shanghai Composite, financials extended losses from the previous day's heavy sell-off. Founder Securities fell 4 percent and Industrial Bank lost 3 percent as investors worry about China's new tightening policies.
Beijing's banking regulator unveiled restrictions on wealth management products (WMPs) earlier this week in order to reduce risk taking, ordering banks to keep greater transparency for each financial instrument sold.
Kospi Crosses 2,000
Seoul's benchmark hit a three-week high at 2,013 points earlier in the session, but closed down at 2,004, its highest levels in two weeks as expectations of fresh stimulus measures offset new threats from North Korea.
The government sharply cut its forecast for 2013 growth on Thursday and vowed to implement bold easing measures, which may include an extra budget bill. The optimistic sentiment overshadowed news that Pyongyang put its rocket units on standby on Friday to attack U.S. military bases in South Korea.
The Kospi has largely under performed Asian peers for the first quarter, rising 0.4 percent compared to a 19 percent rise in Tokyo and 7 percent in Australia. Investors largely attribute this to the yen's decline, which hurts Korean exporters, and tensions with North Korea.
"During March, Korean equities faced the most serious foreign selling, amounting to $2.6 billion of capital outflow on escalating geopolitical tension from North Korea," wrote Steve Wang, research director of Reorient Financial Markets in a note.