Asia stocks turn mixed after upbeat China PMI; earnings in focus

Asian equity markets ended mixed on Thursday following gains in the morning session as attention turned to the region's earnings season.

Earlier in the day, markets rose on HSBC's flash Purchasing Managers' Index (PMI) of Chinese factory activity for July. The index rose to an 18-month high of 52, better than a Reuters poll of 51 and the bank's final reading of 50.7 in June.

"It's a very good strong number to start the third quarter with. It seems that [the government's] mini stimulus measures are continuing to filter through," said John Zhu, greater China economist at HSBC.

A record close on the S&P 500 index overnight also boosted sentiment in Asia. The index posted its 26th record finish this year at 1,987 points. A raft of U.S. earnings are due later on Thursday, including Caterpillar, Ford, General Motors and

Read MoreGet ready for an earnings avalanche Thursday

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China shares rally

Shanghai stocks rose over 1 percent, climbing to a new three-month high and extending gains into a fifth day on news this week that the cross-border investing program called "Connect" could be launched in October. The yuan rose to a three-month high against the dollar.

Real-estate developers rose on reports that 46 cities with restrictions on house purchases will loosen their policies. China Merchants Property surged 8 percent, Poly Real Estate soared over 7 percent while Vanke increased 4 percent.

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Hong Kong's benchmark Hang Seng Index hit a session high of 24,130 points, a seven-year high.

Nikkei down 0.3%

Japan's benchmark Nikkei widened losses in afternoon trade as the yen strengthened on disappointing June trade data. Exports unexpectedly dropped 2 percent on year, down for a second straight month and the trade deficit rose to a two-year high of $8.1 billion.

Refiner Cosmo Oil eased 0.5 percent after a buying a cargo of U.S. condensate, which could be Japan's first oil import from shale production.

Camera maker Canon tacked on 0.7 percent while Advantest dipped 0.1 percent ahead of reporting quarterly earnings after the market close.

ASX up 0.2%

Australia's benchmark S&P ASX 200 finished at its fourth straight six-year peak while the Australian dollar retreated after hitting a new two-week high of $0.9470 earlier in the session.

Financials were in focus on the back of earnings guidance. Macquarie Group lost nearly 3 percent after issuing a cautious outlook for the year ahead while Insurance Australia Group rose 2 percent after saying its fiscal year 2014 performance benefited from lower-than-expected natural peril claims.

Newcrest Mining tumbled over 6 percent after flagging a write-down of between A$ 1.5 to 2.5 billion in fiscal 2014.

Kospi slips 0.1%

South Korea's benchmark Kospi index moved further away from Wednesday' eight-month high after an advanced estimate of second-quarter gross domestic product came in at its slowest pace in more than a year.

In second-quarter earnings news, memory chipmaker SK Hynix skidded over 3 percent after announcing a 2.7 percent annual fall in operating profit. LG Electronics gained over 4 percent after net profit beat estimates while Hyundai Motor rose 1.5 percent despite reporting a near 7 percent decline in net profit.

Nifty flat

Indian shares crept down 0.1 percent after hitting a new life-time high of 7,809 points on Wednesday.

Geopolitics in focus

The U.S. Federal Aviation Authority lifted its ban on airlines flying to Tel Aviv, but warned that it will continue to monitor the airport following reports of rocket fire earlier this week. The United Nations Human Rights Council said Israel may have committed war crimes in its killing of hundreds of civilians during the near three-week offensive on Gaza.

Meanwhile, a Ukrainian rebel commander told Reuters that pro-Russian rebels possessed BUK missiles, the type that was believed to have shot down Malaysia Airlines flight MH17.