Japanese stocks snapped their three-day losing streak on Friday as the yen resumed its decline while speculation on when the Federal Reserve may cut down on stimulus weighed on the rest of the region.
Investors largely shrugged off news that the U.S. House of Representatives passed a bipartisan two-year spending agreement, which suggests U.S. lawmakers may be stepping back from a recent era of confrontational politics. The measure is now expected to head to the Senate next week.
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All eyes on Fed meeting
On Thursday, the Dow hit a five-week low after upbeat U.S. retail sales data raised expectations that the Federal Reserve could begin cutting bond purchases at next week's policy meeting.
"This story of strengthening U.S. growth, cautious sentiment and profit taking has been the dominant theme over past days and we don't expect any major change ahead of the FOMC meeting, particularly given a light slate of calendar ahead," said analysts at Credit Agricole in a morning note.
Nikkei up 0.4%
Japan's benchmark Nikkei pared gains following a 1 percent rally earlier in the session after the yen hit new five-year lows against both the euro and the dollar. Domestic manufacturers benefit from a cheaper currency when they repatriate overseas earnings.
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News that Japan's cabinet approved $53 billion in fresh stimulus, aimed at cushioning the impact of a sales tax-hike next April, also lifted sentiment.
Sydney rises 0.7%
Australia's benchmark rebounded from the previous day's four-month closing low, breaking six straight session of losses thanks to strong gains in resources.
Iluka Resources climbed nearly 3 percent after copper and nickel prices hit five-week highs.
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Meanwhile, the Australian dollar fell below 90 U.S. cents, its lowest level since August 30, after Reserve Bank of Australia governor Glenn Stevens said he preferred a trading level closer to 85 U.S. cents.
Shanghai 0.3% lower
China's benchmark index closed at a two-week low for a second straight session as investors awaited news of the economy's 2014 growth target from an economic planning conference.
Banks extended losses with Merchants Bank leading losses by 2 percent while ICB eased 1 percent.
Citic Bank pared losses to close down 0.2 percent following a 1 percent loss earlier in the session after it asked shareholders for approval to let it write off more than half a billion dollars in non-performing loans.
Kospi down 0.2%
South Korean shares fell to their lowest level in over three months for a second consecutive session, weighed down by sharp declines in large-cap stocks. Samsung Electronics and Kia Motors fell over 1 percent each.
Investors also digested the latest political developments in North Korea. The country's official news agency has reported that Pyongyang has executed the once-powerful uncle of leader Kim Jong Un.
Emerging markets hit
Indian shares dipped 0.8 percent following Thursday's 1 percent sell-off after annual consumer price inflation rose to a higher-than-expected 11.24 percent in November.
Meanwhile, Thailand's benchmark SET Index fell as much as 1 percent as protesters in Bangkok continued to demand the resignation of prime minister Yingluck Shinawatra.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC