Asia Markets

Asian stocks mixed; Railway shares help China outperform

Chinese shares outperformed on Wednesday while the rest of Asian shares drifted lower in quiet trade due to profit-taking and rising political tensions in the region.

Modest gains on Wall Street overnight were unable to boost sentiment. The Dow posted another new all-time peak and the Nasdaq finished at a thirteen-year high thanks to better-than-expected housing reports.

Trading has been subdued this week ahead of Thursday's Thanksgiving holiday and as market players unwind their bets as the month draws to an end.

.(Read more: Goldman most upbeat on Japan, Europe stocks in 2014)

Political risks

In the latest episode of rising tensions in the East China Sea, the Pentagon confirmed that American aircrafts have flown over disputed islands without informing Beijing. The move comes just a few days after Tokyo and Washington criticized China for establishing an air defense zone in the territory.

Thai fin min: Protests will cause system delays

Meanwhile, Bangkok faces a fourth day of anti-government protests after demonstrators surrounded government ministries on Tuesday, demanding the resignation of Prime Minister Yingluck Shinawatra. The protests form the backdrop to a Bank of Thailand monetary policy meeting later on Wednesday; economists are not anticipating a change in interest rates.

Thailand's SET Index finished higher by 1 percent, while the baht pared losses after hitting a new eleven-week low at 32.12 per dollar for a second straight session.

(Read more: Thai protesters step up campaign to oust government)

Shanghai jumps 0.8%

China's benchmark index reversed losses to end eleven points shy of a new one-month high after central bank governor Zhou Xiaochuan called for a quota increase in two key investment schemes, the Qualified Foreign Institutional Investor (QFII) and Qualified Domestic Institutional Investor (QDII) scheme.

(Read more: China's reform drive threatens to derail yuan)

The news overshadowed reports that Beijing will place three hard caps on the interbank market, including limits on how much a bank can lend to institutions. As a result, financials were some of the top gainers with Haitong Securities and Citic Securities higher by over 3 percent each.

Railway firms also outperformed on the back of news that Beijing will build a railway linking Hungary and Serbia, which could bring new contracts for firms. CSR Corp and Daqin Railway rallied 3 percent each.

Confidence in Southeast Asia on the rise: EY

Nikkei 0.4% lower

Japanese equities posted a second straight session of losses as dollar-yen continued to retreat from a six-month high hit earlier this week.

(Read more: Dollar-yen trade is back...and could be better than ever)

Some tech shares climbed following upbeat revenue results from Hewlett-Packard. Nikon and Canon rose 2.6 and 0.8 percent, respectively.

Online retailer Rakuten surged over 6 percent after being promoted to the Topix index.

Panasonic climbed 3.4 percent after sources reported the firm will sell three domestic semiconductor factories to an Israeli firm in an attempt to finalize the sale of loss-making businesses.

Sydney 0.4% lower

Australian miners weighed on the resource-heavy index on the back of lower commodity prices and after data on Wednesday showed declining investment in new resource projects.

Gold miners were the worst hit after bullion prices steadied after dropping nearly 1 percent overnight. Silverlake Resources slumped 14 percent while Kingsgate Consolidated fell 9 percent.

Home builders were declined despite data showing the value of national construction work in the third-quarter beat forecasts to rise 2.7 percent. Boral and Bluescope Steel lost over 1 percent each.

Kospi up 0.3%

South Korea's benchmark index erased early losses to end higher for the fourth straight day despite weak economic data. December's manufacturing outlook fell from a near two-year high in November, indicating that the recovery in Asia's fourth-largest economy remains fragile.

(Read more: These markets arestruggling – Blame the yen)

Industrial Bank of Korea slumped over 4 percent on news that the government is selling 13.1 million shares in the state-owned lender.

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