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Shanghai Comp end up 2.2% after wild ride; rest of Asia up

Stock markets in China ended a volatile session sharply higher on Tuesday, while other bourses in the region extended their rally amid hopes a deal could finally be reached to avert a Greek default.

European officials said they expect to see Greece agree to a deal by Wednesday evening, with an announcement expected Thursday morning. The comments came after the European Central Bank (ECB) raised Greece's emergency funding for its banks for the third time in a week, and officials held crunch talks in a bid to prevent the cash-strapped country from defaulting on its debt.

Overnight, U.S. stocks finished higher, with the Nasdaq Composite closing up 0.7 percent at a record. The blue-chip Dow and the S&P 500 ended 0.6 percent higher each.

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NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Mainland markets rebound

After nursing losses of more than 2 percent for most of the day, China's Shanghai Composite swung back to positive territory in a dramatic fashion to finish 2.2 percent higher. It was the index's first day of trade following an extended weekend.

Earlier in the session, the Shanghai bourse shaved off as much as 214 points to hit its lowest level since May 29 following the release of China's flash HSBC/Markit purchasing managers index (PMI). The flash PMI rose to 49.6 in June, beating Reuters' expectations for 49.4, but it still remained in contraction territory.

Tuesday's wild ride came on the back of last week's 13 percent steep correction, which marked the index's worst showing since the global financial crisis in 2008. Analysts said liquidity concerns were at the forefront of the correction, sparked by new curbs on margin financing and as a series of new-share listings exerted pressure on liquidity.

The blue-chip CSI 300 index also reversed course to close up 3.2 percent, while the smaller Shenzhen Composite index ended up 1.2 percent after a 3.2 percent slump earlier in the day.

According to Reuters, the rebound was backed by fresh buying from local and foreign investors who took heart from reports by domestic state-run media that the bull run isn't over.

However, analysts from HSBC expect the correction to continue in the short term as the country's securities regulator attempt to cool the market. "In our view, the A-share market correction is likely to continue in the short term as the leverage- or liquidity-driven beta rally could be over. The magnitude of the selling could depend on insiders (i.e., senior management and significant or controlling shareholders) who have been selling into the rally," Steven Sun, head of Hong Kong and China equity research at HSBC, wrote in a note.

Read MoreChinese economy healthier than data suggest: Beige Book

Meanwhile, Hong Kong's Hang Seng index advanced 1 percent to touch its peak since June 12.

"There's [a tale of] different China's here. The one that's preferred by the foreigners, which is the H-shares, is more rational and valuations are still at 9x price-to-earning (PE) ratios, while the A-share markets are close to 22-23x PE. The ChiNext is at 80x PE," Bhaskar Laxminarayan, chief investment officer for Asia at Pictet Wealth Management, told CNBC's "Street Signs Asia."

Nikkei rises 1.9%

Japan's Nikkei 225 extended Monday's gains to touch its highest level since April 2000.

Heavyweight component Softbank is in focus following news that the mobile carrier is forming a joint venture with Bharti Enterprises and Taiwan-based Foxconn Technology. Shares of Softbank bounced up 1.5 percent, contributing significant support for the bourse.

Toshiba recouped earlier losses to nudge up 0.9 percent, following a Nikkei business daily report that the company's semiconductor and personal computer businesses were also affected by accounting irregularities.

ASX soars 1.3%

Australia's S&P ASX 200 index finished at a three-week high, with banking plays leading the charge.

Commonwealth Bank of Australia led gains among the major lenders, up 2 percent, while investment group Macquarie advanced 1.4 percent.

Oil-related counters also got a boost from firmer energy prices overnight. Santos tacked on more than 1 percent each, while Oil Search and Woodside Petroleum ticked up 0.1 and 0.3 percent, respectively.

By contrast, travel agency Flight Centre slumped 14 percent after issuing a warning on full-year earnings.

On the domestic data front, first-quarter house price index rose 1.6 percent on-quarter, missing Reuters' expectations for a 2.3 percent increase. On a year-on-year basis, the house price index advanced 6.9 percent.

Kospi jumps 1.3%

Optimism over Greece also lifted South Korea's key Kospi index to a near three-week peak and chalking up a five-day winning streak.

Bargain hunters swooped in on Samsung Electronics, which rocketed 3.1 percent after the stock dropped to seven-month lows last week. Meanwhile, Cheil Industries - the de facto holding company of Samsung Group - surged 5.5 percent, helped by renewed optimism about its all-share takeover offer for Samsung C&T.

Financials and brokerages also attracted hefty buy orders; KB Financial and Woori Bank rose 2.9 and 3.9 percent, respectively, while Daewoo Securities led gains among securities firms with a 4.4 percent rise.

STI adds 0.6%

Singapore shares tracked regional peers to bounce up to a near one-week high despite government data showing consumer prices in May fell 0.4 percent from a year ago.

The latest inflation data means that Singapore's consumer price index has stayed in negative territory for seven consecutive months now.