Nikkei Closes Up Over 1% After Volatile Start

Japan's benchmark stock index closed higher on Tuesday after three days of extreme volatility. The Nikkei managed to stabilize after a shaky morning session, which saw the index zigzag between gains and losses after shedding 1 percent at the open.

"There still seems to be a large amount of confusion in the market on whether the Bank of Japan is trying to engineer lower yields through its bond-buying program, or higher yields, or create negative real bond yields. It seems that until this point is made clear, then confusion will hold the equity market back from resuming its trend," said Chris Weston, market strategist at IG in a note.

Australia's S&P ASX 200 and Seoul's Kospi closed flat as investors awaited direction from U.S and U.K markets when they resume trade on Tuesday after being shut for public holidays. Meanwhile, the Shanghai Composite hit a two-month high.

ASX 200
CNBC 100

Nikkei Rallies

The benchmark index accelerated its pace of gains in the afternoon after the nation's economy minister Akira Amari dismissed recent market volatility as merely an adjustment phase.

The 1 percent rally led to a sudden increase in yen selling, which saw the currency lose over 1 percent against the dollar to approach the 102 handle.

(Read More: Forget the Volatility, Nikkei May Test 17,000: Chart)

Investors bottom-fed on battered machinery and exporter stocks that were sold-off for the past three sessions. Mitusbishi Motors surged 13.6 percent.

Shanghai Up 1%

A rally in brokerages led the benchmark index to its highest levels in over two months after trading rangebound for most of the session.

Founder Securities led gains by 7 percent as investors rushed into the sector on an improved outlook for profitability

Sydney Steady

A combination of factors, including jitters about an early end to the Federal Reserve's ultra-lose monetary policy and sluggish Chinese demand for resources limited gains in Australian stocks.

Financials rose with Westpac leading gains by 1 percent. Defensive stocks like banks have led losses in the past four sessions as the Australian dollar continues to slide against the greenback.

The Aussie dollar has fallen more than 8 percent against the U.S. dollar from an April high, leading to concerns about the strength of recovery as the mining boom slows.

(Read More: More Rate Cuts in Australia? Why Not)

"It [the weak Aussie] suggests foreign investors continue to shed their Aussie investments for ones in their own countries, or elsewhere," said Evan Lucas, market strategist at IG, in a note.

Shares of struggling media firm Ten Network fell 1 percent after unveiling a new strategy to challenge its main rivals.

Kospi Adds 0.3%

Automakers and tech exporters pared gains as the Japanese yen resumed its decline against the U.S dollar. Any signs of weakness in the yen hurts the competitive position of South Korean exporters.

Kia Motors fell over 1 percent after rallying up to 2 percent earlier in the session.

NHN, the country's top search engine operator, jumped 1 percent on news that it will be adding a local smartphone game developer to its list of 53 subsidiaries.

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