Asia Pacific markets traded mixed on Thursday after data showed growth in China's industrial output fell. Overnight, British lawmakers rejected the idea of leaving the European Union without a Brexit deal in place.
The Nikkei 225 in Japan gave up its gains to finish flat at 21,287.02 while the Topix index fell 0.24 percent to 1,588.29.
Chinese mainland shares withdrew as the Shanghai composite fell 1.2 percent to 2,990.68 while the Shenzhen composite tumbled 2.311 percent.
Data on Thursday showed China's industrial output growth fell to a 17-year low in the first two months of the year, according to Reuters. That further pointed to an economic slowdown in the world's second-largest economy. But investments picked up pace as the government fast-tracked more road and rail projects, the news agency added.
Beijing has already pledged hundreds of billions of dollars in tax cuts and infrastructure spending to support the flagging economy.
The on-shore yuan traded at 6.7134 to the dollar at 2:44 p.m. HK/SIN after the People's Bank of China set the day's yuan midpoint at 6.7009. China's central bank allows the currency exchange rate to rise or fall 2 percent from the midpoint rate.
Australia's benchmark closed up 0.3 percent at 6,179.60.
Investors became optimistic when U.K. lawmakers rejected the idea of leaving the EU without a deal in place under any circumstance. Initially Prime Minister Theresa May's government had asked Parliament to vote on ruling out a no-deal Brexit for the official Mar. 29 deadline.
The passing of the amended motion has severely undermined May's authority and could potentially lead to ministerial resignations, some analysts said.
The British pound traded around $1.3271 at 2:45 p.m. HK/SIN after previously surging around 2 percent against the greenback to $1.3339 following the U.K. parliament vote — it was the biggest move since April 2017.
Wednesday's vote to reject a no-deal Brexit "does not remove the risk of a disorderly Brexit on March 29," analysts at Singapore's DBS Group wrote in a Thursday morning note. "The pound's appreciation yesterday is still set on shaky and not on firm foundation."
Members of the U.K. parliament will vote again Thursday evening to seek an extension to Article 50, which oversees the withdrawal process from the EU, thus extending the departure date beyond Mar. 29. The EU would have to agree to this and the U.K. would need to give a good reason for requesting such a delay.
Asia will "face serious contagion" effects of Brexit only in the unlikely event that the U.K. leaves the EU without a deal in place, which is known as a hard Brexit, Nomura's Rob Subbaraman said in a note. He added that would likely drive the U.K. economy into recession and prompt a large depreciation of the pound.
"In terms of the trade channel, the UK is not a major export market for Asia. India has the largest exposure, followed by China," he said. "On the other hand, reflecting the UK's position as a global financial hub — UK financial sector assets account for over 8 (times) its GDP — the financial channel is significant."
Subbaraman pointed out that British banks have relatively large claims on Asia, particularly in financial hubs such as Hong Kong and Singapore as well as in Malaysia and Taiwan.
"A global asset market sell-off could add to this financial channel, through negative wealth, confidence and liquidity effects," he said, adding, "We believe only in the unlikely event of a hard Brexit would there be a high risk of UK banks retrenching from Asia and activating these financial channels."
Overall, he said, it is likely the ongoing Brexit saga will remain "a sideshow for Asian economies."
Elsewhere, the dollar index, which measures the greenback against a basket of its peers, last traded at 96.649 against a basket of its peers at 2:51 p.m. HK/SIN, declining from levels above 97.000 earlier in the week. The , considered a safe haven currency, traded at 111.56 to the dollar.
— CNBC's Holly Ellyatt contributed to this report.