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Emerging markets lead Asia higher after China data; Nikkei bucks trend

Asian equity markets were mostly higher on Friday with the exception of Japan after China's economy grew at its fastest pace this year.

Emerging markets outperformed with Indian stocks up 1.5 percent and Thailand's 1 percent higher. South Korea's Kospi closed at a two-year high while Australia's hit a new five-year high.

The Shanghai Composite ended only modestly higher but was the week's biggest loser while Japan's Nikkei bucked the trend to dip 0.2 percent due to a strong yen.

"Markets seem to be delaying expectations for when a China slowdown is going to come. We don't really see it. China will continue to benefit from its manufacturing & export sector. It looks like a fairly good environment for China in the future," said Steve Goldman, Managing Director, Kapstream Capital.

(Read more: Taper talk could worsen the dollar rout)

Asia Marketwrap 131018 Chart

LastToday's % Change1 Week % ChangeMTD % ChangeYTD % Change
Shanghai Composite2193.78,0.24%-1.54%0.38%-3.32%
S&P ASX 200,52321.5,0.73%1.73%1.34%14.47%

China data deluge

China's gross domestic product (GDP) growth rose to 7.8 percent in the third quarter on year, the National Bureau of Statistics reported on Friday, up from 7.5 percent in the previous three months.

China Q3 GDP: Breaking down the numbers

Meanwhile, industrial output for September, released alongside the growth data, came in slightly higher than forecasts, with an increase of 10.2 percent from a year earlier.

Nikkei 0.2% lower

A stronger currency and profit-taking overshadowed Chinese data for Japanese investors, leading the benchmark Nikkei to snap a seven-session winning streak as dollar-yen hovered near its overnight one-week low of 97.71.

Industrial manufactures took a hit with robotics maker Fanuc and construction equipment maker Komatsu down over 1 percent each.

(Read more: Why Japan stocks may storm higher even if yen stalls)

After the market close, Bank of Japan governor Haruhiko Kuroda said that the central bank would continue with quantitative easing as long as necessary in order to achieve 2 percent inflation.

Shanghai up 0.2%

China's benchmark index broke its four-day losing streak while the hit a record high for a fifth consecutive day against the weak U.S. dollar.

Brokerages were some of the most actively traded stocks. Haitong Securities and Citic Securities rallied nearly 2 percent each.

(Read more: Chinese agency downgrades US ratings: should you care?)

Real-estate developers rose in volatile trade. Gemdale and Vanke climbed over 1 percent following declines earlier in the session.

Positioning for a risk-on environment

Sydney up 0.7%

Australia's resource-heavy index rose to its highest levels since 2008 as miners cheered China's growth data. Australian stocks are one of the most sensitive to China's economy given that Beijing is Sydney's largest trading partner

Gold miners Endeavor Mining surged 9 percent while Evolution Mining jumped nearly 7 percent as the yellow metal traded near a one-week high.

(Watch now: Gartman: Gold is not a safe haven)

Warrnambool Cheese and Butter Factory climbed 6.3 percent after its second-largest shareholder emerged as the newest bidder in a takeover battle for the dairy firm.

Meanwhile, the Australian dollar traded within sight of its previous four-month high of US$0.9647 after central bank governor Glenn Stevens said a lower currency would boost the economy.

Kospi up 0.6%

Earnings news dominated trade in South Korean markets while exporters also benefited from a stronger Japanese currency. As the yen rises, local exporters receive a competitive advantages in overseas markets.

Memory chip maker LG Display rallied 2.6 percent after reporting a 51 percent rise in annual net profit for the third-quarter while Samsung Engineering fell 3 percent after posting a large quarterly operating loss.

Emerging markets rally

Indian stocks briefly hit a new three-year high at the 20,765 mark, Thailand's benchmark index climbed above 1,480 points to a one-month high and Philippine stocks rose 0.8 percent.

By's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC