Asia Higher Ahead of US Jobs; Nikkei Bucks Trend

Asian equities were mostly higher on Thursday with the exception of Japan but trading was cautious ahead of the European Central Bank meeting later in the day and Friday's key U.S. jobs report.

Australia's S&P ASX 200 rallied 1 percent, Seoul's Kospi index closed at a session high and the Shanghai Composite rose to a one-week high. Japan's Nikkei index however, extended slight declines in choppy trade.

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Major Risk Events

U.S. economic data was mixed overnight, providing traders with little direction ahead of the non-farm payrolls report. The ADP employment report showed a gain of 188,000 private-sector jobs, while service sector growth hit a three-year low.

A political crisis in Portugal meanwhile revived fears about the euro zone debt crisis after the yield on the benchmark 10 year note soared above 8 percent overnight.

Portugal could be high on the agenda for the European Central Bank, which holds a policy meeting later on Thursday. Analysts widely expect the central bank to leave its main interest rate unchanged and to maintain its accommodative stance.

Australia Climbs 1%

Energy stocks helped Sydney's benchmark index trade above its 200-day simple moving average of 4,778. Carnarvron Peroleum and Linc Energy rallied 14 percent after oil traded above $101 a barrel.

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Shares of troubled surf wear retailer Billabong surged 18 percent to be the best-performing stock on the index after U.S. hedge funds Centerbridge Partners and Oaktree Capital Management took control of the retailer's loans, The Australian Financial Review reported.

The Relative Strength Index (RSI) of the S&P ASX 200 index stands at 47, which confirms the index is still in a downwards trend. A reading below 50 signals that average losses are higher than average gains.

Nikkei Slips 0.2%

A stronger currency capped gains on Japan's benchmark index as the dollar continued to trade below the 100 yen level, but moved off a session low of 99.6. Exporters came under some pressure with machinery manufacturer Sumitomo Heavy Industries lower by 3 percent.

Shares of Japanese advertising firm Dentsu sank 9 percent after announcing it will put 8 million new shares on the block, amounting to $1.2 billion.

Optimistic comments from Bank of Japan Governor Haruhiko Kuroda were unable to push Japan's benchmark index into positive territory. Kuroda said that the central bank's stimulus program is working to place the economy on track for a recovery.

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Shanghai Above 2,000

China's benchmark index reversed earlier losses to hits its highest level in over a week after the official China Securities Journal reported that the economy's growth model remained stable, but said that government debt threatened the recovery. Still, the index is well-below it's 200-day simple moving average of 2,183.

Gains were supported by a strong rally among property counters. China Merchants Property surged over 5 percent while Gemdale rose 4.8 percent.

Major banks cooled their pace of declines in afternoon trade following an initial 1 percent drop after the People's Bank of China haled its regular open market operations for a second straight week. Bank of China and Industrial and Commercial Bank of China pared losses to inch down 0.7 percent each.

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Kospi Up 0.8%

Exporter shares in Seoul erased earlier losses to lead the benchmark index higher, led by technology stocks. Market heavyweight Samsung Electronics rallied over 1 percent ahead of posting second-quarter earnings guidance on Friday.

Electronics maker Samsung SDI jumped over 2 percent and memory chip maker LG Display rose 1 percent.

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