Asia Markets

Shanghai shares outshine Asia as credit fears ease

Asian equities were mostly higher on Wednesday with Shanghai leading gains as fears of a credit crunch eased while regional central bank decisions were in focus.

The Bank of Japan (BOJ) left monetary policy steady at the conclusion of its two-day meting, as widely expected, but some investors were disappointed with the central bank's failure to signal additional easing measures.

Attention now turns to the Bank of Thailand's (BOT) policy decision, due at 3:30pm SIN/HK. Most analysts are predicting a rate cut, which comes as a state-of-emergency was imposed in Bangkok on Tuesday.

News that the IMF slightly to 3.7 percent this year, from 3.6 percent in October, also lifted sentiment.

(Read more: Exotic markets few talk about, but probably should)

Shanghai rallies 2.1%

Mainland shares closed at their highest levels in nearly three weeks as investors breathed a sigh of relief over easing cash rates. The seven-day benchmark repo rate traded around 5 percent, well off Monday's 6.3 percent high that saw the benchmark Shanghai Composite sink to a six-month low.

On Tuesday, the People's Bank of China moved to ease fears of a credit squeeze by pumping in $42 billion in the interbank market, the first injection since late-December and the biggest one-day amount in nearly a year.

(

Financials led the gains; and rose over 1 percent each while Minsheng Bank and Hua Xia Bank jumped over 2 percent each.

Nikkei 0.2% higher

Japan's benchmark index eked out slim gains after falling as much as 1 percent earlier in the session. A slightly stronger currency capped larger gains as the yen moved further away from Tuesday's one-week low of 104.75 per dollar.

Investors are now awaiting comments from Bank of Japan governor Haruhiko Kuroda later in the day for hints on the chances of further monetary easing this year.

(Read more: Why lowering Japan's inflation target would be a mistake)

Electric furnace steelmaker Tokyo Steel rallied 5 percent after returning to profit for the first nine months of the business year.

Australian inflation data could spur RBA action: Pro

Sydney falls 0.2%

Australia's benchmark fell after data showed consumer prices rose more-than-expected in the December quarter, reducing the chances of an interest rate cut from the Reserve Bank of Australia. In reaction, the Australian dollar rose to $0.8873 against the greenback, retreating further from Monday's three-and-a-half year low.

"This is clearly a disappointing outcome and substantially reduces the possibility of another rate cut from the RBA. However, while the increase in inflation will concern the RBA, it's not bad enough to bring on an imminent rate hike either as the annual inflation rate is still in line with the RBA's target," said Shane Oliver, head of investment strategy and chief economist at AMP Capital.

(

crept down 0.8 percent, tracking declines in its U.S. listed ADRs, despite reporting a 16 percent rise in iron ore output for the three months through December.

Gold miner Medusa Mining lost 5.6 percent following a 10 percent plunge in early trade after ceasing all mining activities in its Philippines gold mine due to flooding.

Kospi gains 0.3%

South Korean exporter stocks rose as the hit a two-week low; a weaker currency boosts their competitive advantage in overseas markets. led gains by over 3 percent.

Risk appetite was also bolstered by news that the government unveiled a three-year plan focused on economic innovation and aimed at wooing foreign investors.

Emerging markets lower

Thailand's benchmark SET index extended losses after dropping 1 percent in the previous session while the was steady around 32.86 per dollar.

Indian shares meanwhile, were flat after a central bank panel recommended inflation as the Reserve Bank of India's main objective, rather than economic growth.

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