Nikkei Breaches 15,000; Rest of Asia Flat

Japan's Nikkei stock index hit a fresh five-and-a-half year high on Wednesday, resuming its out-performance as the weak yen hovered around 102 to the dollar, while other Asian markets pared initial gains.

The Nikkei 225 rose over 2 percent to close above 15,000, its highest levels since January 2008. Australian shares reversed gains after hitting a five-year high, while Seoul's Kospi was flat and the Shanghai Composite closed up 0.3 percent.

Asian markets outside of Japan were unable to track record overnight rallies in the U.S. and Europe. Still, experts said risk appetite remained solid.

"That equity market adage, sell in May and go away, is not so much misleading as it is misdirected," Vishu Varathan of Mizuho Corporate Bank said in a note. "For May, the S&P 500 is up 3.3 percent, Euro Stoxx over 3 percent and the Nikkei 6.5 percent - So, anyone who had sold and gone away would be smarting right now."

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Nikkei Hits Highs

Sony surged 10 percent following a 10 percent rally in its overnight American Deposit Receipts on news that activist investor Dan Loeb has called on the Japanese electronics giant to spin off its entertainment business.

(Read More: Change at Sony: Start of Third Leg of Abenomics?)

Isuzu Motors extended gains by 21 percent following Tuesday's report in the Nikkei daily that the firm increased its budget outlays for the current financial year.

(Read More: Nikkei Getting 'Bubbly,' Correction Coming: Mr Yen)

Experts say the Nikkei has further upside ahead as Prime Minister Shinzo Abe is expected to announce the last 'arrow' of his 'three-arrow' economic agenda.

"Abe could announce a supply-side growth strategy as early as Friday according to cabinet office sources. The golden (third) arrow of structural reform will focus on corporate tax cuts, deregulation of service sector industries and investment policy," said Uwe Parparat, chief strategist at Reorient Financial Markets in a report.

S&P ASX 200 Falls

Australia's benchmark index hit a fresh five-year peak at 5,249 points but reversed gains to close down 0.5 percent as mining stocks deepened their losses after iron ore prices fell to a fresh 2013 low.

Rio Tinto and BHP Billiton lost 3 and 2 percent respectively while mining contractor United Group slumped 16 percent after slashing its full year profit guidance.

Sentiment was also dampened after the government forecast a budget deficit of A$20 billion ($19 billion) this year. The Aussie dollar pared losses after initially sinking to an eleven-month low against the greenback in reaction to the deficit forecast.

Shanghai Steady

Shanghai stocks were unable to break out of the 2,215-2,225 range after Premier Li-Keqiang dashed investor hopes of easy monetary policy, stating that China has limited room to use policy stimulus to support the economy.

(Read More: China Poised to Surpass US In Corporate Debt)

Caution also set in ahead of the release of April's foreign direct investment activity. Investors are awaiting the data for signs of increased capital flows from March's gain of 5.7 percent.

Kospi Up 0.1%

Construction stocks helped cap heavier losses on the benchmark index with gains of 15 percent in Dongyang and Byucksan Engineering & Construction.

"The property market seems to have bottomed based on housing price and transaction statistics," analysts at Citi said in a report. "Based on the secured projects and pipelines we expect better contract activities in the second quarter. The announced Bank of Korea rate cut will be also supportive for the property market by improving housing affordability."

The Kospi still remains well-off from last week's one-month high of 1,983 points.

By's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC