Australian shares lead Asia higher after robust US data

Asian equity markets ended Wednesday trade with gains following upbeat U.S. economic data overnight.

Wall Street shares began the second half of the year with the Dow Jones Industrial Average and S&P 500 briefly rising to all-time highs after Markit's gauge of U.S. manufacturing activity in June hit a four-year high and auto sales raced to an eight year high last month.

Developments in Iraq remain on the radar for investors. The opening session of the country's new parliament failed to elect a new speaker on Tuesday despite Washington's urge to form a new government as quickly as possible. The speaker is one of the three leadership positions along with the president and prime minister.

Read MoreIs Asia to become the finance center of the world?

ASX 200
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Nikkei 0.5% higher

Japanese shares rose to a new one-week closing high after scaling a five-and-a-half month high earlier in the session, building on Tuesday's 1 percent rally.

Automakers were in focus following June's strong U.S. auto sales data; Nissan Motor and Mazda Motor climbed over 1 percent each.

The country's biggest online retailer Rakuten rallied over 2 percent after AirAsia said on Tuesday that it would set up a low-cost airline with the Japanese firm.

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China shares up

Mainland shares gained 0.4 percent to finish at a two-week high thanks to strong gains in new market listings; Yixintang Pharmaceutical, Forbon Technology and Shapuaisi Pharmaceutical all soared in their first day of trade.

China Eastern Airlines rose over 1 percent after announcing that it has officially transformed its Beijing-based subsidiary China United Airlines into a budget carrier.

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Hong Kong stocks resumed trade at a near seven-month high following Tuesday's public holiday. Property developers led the gains with Henderson Land and Cheung Kong both 3 percent higher.

ASX 1.5% higher

Australia's S&P ASX 200 index finished at a one-week high, recovering from the previous day's two-and-a-half month low despite weak trade data. The economy posted a deficit of A$1.91 billion in May, below forecasts for a A$120 million deficit, which saw the Australian dollar retreat from Tuesday's seven-month high against the greenback.

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In corporate news, property giant Australand rose 1 percent after its board recommended an A$4.48 a share takeover offer from Singapore's Fraser. Goodman Fielder lost nearly 4 percent after it recommended shareholders to accept a reduced takeover bid from Singapore's Wilmar and Hong Kong investor First Pacific.

Treasury Wine Estates closed down 1 percent after a law firm said it filed a class action lawsuit against the company.

Kospi up 0.8%

South Korean stocks climbed to a new five-week high while the won hit a fresh six-year peak against the greenback thanks to strong foreign buying.

Among blue-chips, Samsung rallied 1.4 percent and LG Electronics tacked on 0.8 percent.

Sensex up 1.3%

India's benchmark index rallied to a fresh record high on expectations for positive reforms in the federal budget, which is due to be presented next week.