Asian Stocks Pare Gains to End Mixed

Asian stock markets moved off session highs on Friday to end mixed with the Nikkei leading gains by 1.4 percent after its stunning 5 percent dive in the previous session. Sentiment improved after latest U.S. data eased concerns of an early end to the Federal Reserve's bond-buying program.

Australia's S&P ASX 200 and mainland equities finished flat and the Kospi ended in positive territory but moved off a one-month high.

Lower-than-expected U.S. GDP figures and rising claims for unemployment benefits reassured investors that the Federal Reserve would not start tapering stimulus anytime soon.

(Read More: Can Global Markets Shake Off the Nikkei Jitters?)

Asia's traditional market laggard, the Shanghai Composite gained 5 percent in May, far outperforming Asia's major markets. Australia's index was the worst performer, down 4.7 percent for May.

In comparison globally, the Dow Jones Industrial Average and S&P 500 are both up over 3 percent this month, while the FTSE EuroFirst 300, a broad measure of European stocks, is higher by 2 percent.

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Nikkei Recovers

Aggressive buying in the exporter space supported Japan's benchmark index with Tokyo Electron leading gains by 4.7 percent after the yen moved off the previous day's three-week high against the greenback.

Investors digested a mixed bag of economic data. Industrial output surged 1.7 percent from the previous month while consumer prices fell 0.4 percent annually. Experts say that a real recovery will only occur once the government implements long-term structural reforms, widely expected next week.

"I think there is an issue that if we're not able to show appreciable inflation by the end of this year, it may become an issue not only for markets but also for [Prime Minister] Abe himself," said Michael Woolfolk, managing director and senior currency strategist at The Bank of New York Mellon.

(Read More: One Surprising Factor Driving Inflation in Japan)

Retail stocks that were sold off in recent sessions recovered gains with Fast Retailing climbing 4.6 percent.

Sony shares rose 2 percent after CEO Kazuo Hirai told CNBC that the board will review investor Dan Loeb's proposal to spin off part of the entertainment business.

Shanghai Pares Gains

The benchmark index crept lower in late afternoon trade as caution set in ahead of China's official purchasing manager's index (PMI) for the month of May, due for release on Saturday. Analysts widely expect a contraction from last month's reading of 50.6.

Activity in mainland equities has been relatively quiet in recent sessions with the index trading rangebound at the 2,310-2,340 level. Still, the index is up over 1 percent for the week.

(Read More: China Stocks Are May's Best Performers)

Australia Ends Flat

Sydney's S&P ASX 200 index recovered after tumbling 1 percent on Thursday as stronger metal prices supported mining stocks.

Gindalbie Metals and Western Areas rallied over 4.5 percent each while Rio Tinto and Mount Gibson rose 3 percent each after copper prices rallied overnight and gold rose to a two-week high.

Investors are looking ahead to next week's Reserve Bank of Australia's policy meeting. Experts say it's a close call if the central bank will cut rates.

"The $A hasn't really fallen enough to provide a big stimulus to the economy, the latest business investment readings confirm that mining investment has peaked, readings for business and consumer confidence have been poor. As a result, with low inflation providing plenty of scope to ease, the RBA should act again on its easing bias," said Shane Oliver, head of investment strategy & chief economist at AMP Capital in a note.

Kospi Hits Highs

Continued strength in the yen boosted the competitive edge of South Korean exporters against their Japanese rivals. Hyundai Motor rallied 1.4 percent.

The benchmark index closed off a session high of 2,013, its highest level since April 29 but still managed to post gains of 2 percent for the month of May.

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