US Data Drive Asia; China Earnings in Focus

Australian stocks led Asia higher on Wednesday after upbeat U.S. economic data provided temporary relief to the on-going euro zone worries while earnings momentum drove gains in greater China.

The S&P ASX 200 added 0.9 percent thanks to a rebound in resources while Seoul's Kospi sat near a one-week high. Japan's Nikkei however, lagged behind as investors awaited bold easing measures from the central bank.

Meanwhile, the Hang Seng Index came off a one-week high and the Shanghai Composite closed in positive territory for the first time in three days.

Encouraging economic reports from the U.S. pointed to an improving economy and boosted Wall Street overnight. The S&P/Case Shiller home price index logged its biggest year-on -year increase since 2006 as durable goods orders rose over 5 percent in February from a month earlier.

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Cyprus was still in the spotlight. Banks remain closed on the island and will be subject to capital controls when they re-open to prevent a run on deposits. Finance Minister Michael Sarris said that big depositors could lose about 40 percent, but an exact figure had yet to be decided.

"You can't leave your money in the bank — that's the lesson we're learning now with Cyprus. Why leave your money in an interest-bearing bank account when you never know, the bank could fail. Why not buy something that central banks can't print?" said Peter Schiff of Euro Pacific Capital on CNBC's "Asia Squawk Box."

Nikkei Steady

Tokyo equities were unable to close above the 12,500 mark for a second straight session, even after news that the Bank of Japan may start asset purchases immediately rather than in 2014.

The yen resumed its fall to trade around 94.8 against the dollar, but the decline also proved unable to lift shares. After its recent rapid decline, the yen has regained some lost ground – it is up 2 percent from a three-and-a-half year low of 96.7 per dollar hit on March 12.

"We're not seeing the direct, verbal attacks on the yen anymore and that is important for the markets," said David Mann, head of regional research at Standard Chartered.

(Read More: Ssshh! Why Japan Is Keeping Quiet on the Yen)

Weakness in the Japanese currency has been capped in recent sessions on mounting worries about the euro zone. Investors usually shed risky assets and flock towards the safe-haven yen in times of uncertainty, which has hindered gains in the Nikkei during recent sessions.

Greater China Gains

Hong Kong markets lost ground after touching a fresh one-week high at 22,508 points earlier in the session. Property stocks were in the spotlight. Developers like Hutchinson Whampoa, controlled by Li Ka-shing, rallied 1.5 percent despite logging a 53 percent decline in 2012 net profit.

Mainland shares were within sight of a two-month high of 2,344 points after trading above the 2,300 level for the entire session.

Financials led the rally with Founder Securities up 3 percent and China Pacific Insurance Company rising 1.5 percent.

Three of China's largest banks have posted weak 2012 net profit this week but investors are cheering the fact that bad-loan ratios declined overall as lenders cut their exposure to non-performing loans.

"The worst is probably over. We see pressure on the net interest margin side but the sense is that non-performing loans are not going to get a lot worse in 2013," said Timothy Wong of DBS Group Research on "Cash Flow."

Oz Resources Rebound

Iron ore miners led gains in Sydney with Fortescue Metals rallying 4.4 percent after JP Morgan upgraded the firm to overweight from neutral. This sparked a sector-wide rally with Atlas Iron advancing 0.9 percent.

Shares of QBE rallied 3.7 percent after its chief executive said that Australia's largest insurer by market value would exit unprofitable businesses.

(Read More: Are Aussie Stocks Headed for a Correction?)

The index finished below the 5,000 mark for the sixth straight session and one expert warned of further difficulties down the road for Australian investors.

"It's been easy until now to make money. You could buy everything that was paying a dividend but from now on, it's going to be much harder. You're going to have to find the businesses that perform and you'll see a lot more differential between the performance of different stocks out there," said Steve Johnson, CIO of investing research publication Intelligent Investor.

Won Supports Kospi

In Seoul, gains from a weaker won offset earlier losses from renewed tensions with North Korea. The benchmark Kospi hit a one-week high at 1,995 points earlier in the session and closed just 2 points shy from that level.

The won fell to 1,111 against the greenback, inching closer to a six-month low of 1,120 level, hit earlier this month.

The currency's decline boosted exporters such as automakers Hyundai Motor and Kia Motors, which jumped 1.5 and 2 percent, respectively. Exporters are usually the first to react in currency movement swings as weakness in the won translates to a higher value of their repatriated earnings.