China Shares Outperform Asia on Stimulus Hopes

Mainland equities rallied over 2 percent on Wednesday after China's dismal trade figures spurred hopes that the People's Bank of China (PBOC) may ease policy in order to boost economic growth.

Meanwhile, the rest of Asian stocks trimmed earlier gains on concerns about a slowdown in Beijing. Australia's S&P ASX 200 fell off its five-week high, while Japan's benchmark Nikkei and Seoul's Kospi index inched down 0.4 percent each.

Chinese exports for the month of June fell 3.1 percent from a year earlier, the first decline since January 2012 and sharply lower than a Reuters forecast for a 4 percent rise. Meanwhile, imports came in 0.7 percent lower, well-off from expectations for an 8 percent gain.

"My base line is that there is no export growth in China this year, at least until we see a pick from the G3 economies begin to materialize," said Tim Condon, head of research for Asia with ING Financial Markets.

ASX 200
CNBC 100

Overnight Boost

Chinese data overshadowed gains from a positive Wall Street lead. U.S. stocks logged their fourth-straight session in positive territory on Tuesday. The S&P 500 was about 1 percent below its all-time closing high of 1,669.16.

(Read More: Most Hated Bull Market Ever?)

Minutes of the Federal Open Market Committee (FOMC)'s latest policy meeting will be released later in the day. The report may be watched for further clues as to when the central bank could begin paring back its bond-buying program.

Shanghai Up 1.8%

Optimism about the chances of monetary stimulus pushed the Shanghai Composite above the key 2,000 level for the first time in three sessions.

(Read More: Just How Low Will China Allow Growth to Go?)

A rally in resources and financials lent support the index. Oil refiner Sinopec jumped 6.5 percent while Jiangxi Copper added over 5 percent. Amid brokerages, Founder Securities rose 5.6 percent and Haitong Securities was higher by 6 percent.

Sydney Up 0.4%

Given that the mainland is Sydney's largest trading partner, China's weak trade figures led the benchmark index to pare gains after touching a new five-week high at 4,950 points earlier in the session.

Resource stocks supported the index with close to 6 percent gains in Energy World and Mount Gibson Iron.

(Read More: Mark My Words: Gold Will Bounce)

Consumer sentiment data held steady in July and the lackluster figure weighed on retailers. Myer fell nearly 3 percent while surfwear brand Billabong tanked 10 percent.

"Despite the 200 basis points in cuts that the RBA [Reserve Bank of Australia] has provided, the saving rate has remained elevated and consumption has yet to rise substantially," said Paul Bloxham, chief economist for Australia & New Zealand, HSBC.

Nikkei Slips 0.4%

Tokyo's benchmark index hit a new six-week high at 14,555 points in early trade, but closed well- below those levels after China's trade results.

Retailer Daiei fell 1.7 percent while Fast Retailing lost 2 percent after consumer confidence eased in June from the previous month, highlighting the issue of a sluggish recovery in wage growth.

(Read More: How IBM Emerged as a Test Case for Abenomics)

The BOJ begins its policy meeting later in the day with a decision due Thursday. No change in monetary policy is expected as analysts say the central bank is likely to await the outcome of upper house elections on July 21 before making its next move.

Kospi 0.3% Lower

Gains in South Korean large-cap stocks capped heavier losses on the benchmark index. Samsung Electronics, the Kospi's top heavyweight, rose 0.9 percent while Hyundai Motor, the second-biggest stock on the index, jumped 1 percent.

Asiana Airlines fell 1 percent after rebounding by that amount in the previous session after details of it's Boeing 777 plane crash continue to emerge.

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