Nikkei Leads Rally in Asian Stocks

Japan's Nikkei led the rally in Asian stocks on Thursday on the yen's weakness as positive bank lending data out of China added to overall investor optimism.

Tokyo's Nikkei 225 closed 1.96 percent higher, as autos and electronic companies continued to benefit from a weak domestic currency.

Hong Kong's Hang Seng ended up 0.3 percent, while the mainland China index - the Shanghai Composite - closed down 0.3 percent after opening up 0.5 percent.

Chinese banks extended 1.06 trillion yuan ($171.2 billion) of new local currency loans in March, above market expectations for 850 billion yuan, Reuters reported.

Seoul's Kospi ended a volatile trading day 0.73 percent up amid disappointment over a central bank decision on Thursday. A rate cut had been anticipated, but the Bank of Korea surprised investors by holding rates steady at 2.75 percent.

(Read More: Bank of Korea Surprises With No Interest Rate Cut )

"While we continue to see the need for the BOK to cut rates, today's [Thursday's] decision shows its strong reluctance to accommodate the changing economic environment. We now expect the BOK to continue to hold through the rest of 2013 with an easing bias, while the first rate hike will occur in Q1 2014," said Raymond Yeung, senior economist at ANZ.

Meanwhile Sydney's S&P ASX 200 recouped some of the previous day's losses and finished the day 0.79 percent higher as financial stocks led gains.

Asia markets got a strong lead from Wall Street on Wednesday. The Dow Jones Industrial Average climbed 0.8 percent to 14,802, a fresh all-time high, the S&P 500 jumped 1.2 percent to 1,587, breaking above its previous all-time high set in October 2007. The Nasdaq gained 1.83 percent, finishing at a 12-year high.

(Read More: Market Crash Likelihood Goes Up If Stocks Continue to Rally:Marc Faber )

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Hong Kong Gainers

Rises in diaper producer HengAn International and food and beverage firm Tingyi of around 3 percent led gains on the Hang Seng.

Nikkei Higher

Japanese markets were also boosted by better-than-expected machinery orders for February, which are viewed as a gauge of the economy's manufacturing sector. Machinery orders were up 7.5 percent month on month, above the expected 6.8 percent, according to Reuters. Meanwhile, the Topix index ended the day 2.34 percent higher.

Autos continued to drive gains, as the sector stands to benefit from a weaker domestic currency. Toyota, Nissan and Mazda gained 5.8 percent, 4.4 percent and 3.9 percent, respectively on Thursday. Electronics were also strong, with Sharp gaining near 8 percent.

The yen continued to flirt with the psychologically important level of 100 against the U.S. dollar. It traded at 99.73 on Thursday, levels not seen since April 2009.

"The recent weakness in the Japanese yen is only half way through and we have subsequently revised our year-end USD/JPY forecast to 110 for the end of 2013 and 120 for the end of 2014," said William Dong, head of Taiwan equity research at UBS.

(Read More: Nikkei Erupts and This Time It May Be Different )

Australia Rebounds

Rises in financial stocks led gains on the Australian benchmark index, combined with the strong lead from Wall Street. Westpac and ANZ bank both rose 1.9 percent and 1.6 percent respectively.

However, gold miners provided downward pressure with Kingsgate and OceanaGold both down around 7 percent and Resolute Mining down near 8 percent.

Employment data for March provided a disappointment for investors. The unemployment rate rose from 5.4 percent to 5.6 percent, while the number of people employed fell 36,100, compared to an expected 10,000 fall.

Kospi Recoups

Investors appeared to brush off concerns over the threat from North Korea, set to be high on the agenda of the G-8 two-day meet which began on Wednesday in London.

Steep rises in IT stocks helped the country's benchmark index recover losses earlier in the day. Samyung Holdings and Tongyang Network both climbed nearly 15 percent.

Meanwhile, the biggest losers were energy firm Daelim Industrial, which fell over 9 percent and construction firm Hyundai Engineering & Construction, which lost just over 5 percent.

(Read More: Here's the Real Danger Wi th North Korea )