Japan outperforms; rest of Asia cautious ahead of Bernanke

Japan's benchmark index hit a new seven-week high on Tuesday as it resumed trade after being shut for a long weekend but the rest of Asian stocks traded cautiously on worries over the direction of U.S monetary stimulus.

The Nikkei closed just below the 14,600 mark and Australian equities ended flat. South Korea's Kospi fell 0.5 percent and the Shanghai Composite ended above 2,060 points.

ASX 200
CNBC 100

Ben Bernanke in Focus

Global investors are awaiting Federal Reserve chairman Ben Bernanke's annual testimonyon Wednesday for clues on the duration of its bond-buying program.

"In recent weeks the message that he's given is that we have seen signs of improvements in the U.S. economy and we're going to move towards tapering. Then he gives us the message that we got last week, so I think markets will be cautious ahead of Bernanke's testimony," said Robert Rennie, global head of currency strategy at Westpac.

Monday's weaker-than-expected U.S. retail sales for the month of June further added to uncertainty over whether U.S. monetary stimulus could stay in place.

Nikkei up 0.6%

Japan's benchmark index hit its highest levels since May 24 as the yen declined to the 100 handle against the U.S. dollar. Blue-chip exporters led the gains with Nintendo rallying 5 percent while camera maker Canon and consumer electronics firm Panasonic added over 2 percent each.

The index played catch-up with the region as investors cheered a milder-than-expected slowdown in China, suggested by Monday's second-quarter growth figures.

(Read more: Investors swap vulnerable bonds for property)

Speaking at a news conference with finance minister Taro Aso, economics minister Akira Amari said that the government will make efforts to strengthen the economy in order to go ahead with a planned sales tax hike.

Sydney 0.1% higher

Australia's benchmark S&P ASX 200 index was largely unchanged after the Reserve Bank of Australia's latest policy meeting minutes. The central bank left the door open to future easing in light of the recent declines in the Australian dollar, which they said would add to inflation risk.

In response, the currency jumped 1 percent to a session high of $0.9194 against the greenback. Experts said that the minutes signaled a hawkish tone.

(Read more: Hawkish minutes won't change Aussie's downtrend)

"Seldom do the minutes move markets as it's simply a stretched version of the original statement, however in a market searching at every turn for clues of an August cut, the minutes today have shown absolutely no rush to ease again" wrote Chris Weston, market strategist at IG in a note.

Global miner Rio Tinto reversed earlier declines to rally 1.4 percent after reporting that second-quarter global iron ore production rose 7 percent. Meanwhile, shares of rival BHP Billiton added 0.5 percent ahead of posting output results on Wednesday.

The index traded within range of Friday's seven-week high of 5,012 points.

Shanghai adds 0.3%

China's benchmark stock index erased earlier losses to eke out slim gains but sentiment remained rattled after a report in the official China Securities Journal highlighted uncertainty over the extent of the government's tolerance for slower growth. The article said that growth rates below 7 percent would not affect China's goal of structural adjustment.

(Read more: From the 'Bernanke put' to a 'Li Keqiang put'?)

Real estate developers fell after the National Bureau of Statistics spokesman said on Monday that China still needs to curb property prices. Gemdale eased 1 percent while China Merchants Property lost 0.6 percent.

Kospi below 1,870

The weaker yen weighed on South Korea's benchmark index and led to a 1 percent loss in tech exporters like Samsung Electronics, the biggest stock on the index. LG Electronics and LG Display dropped nearly 2 percent each.

(Read more: Apple iPhone 5S production to begin soon: Analyst)

Solar stocks rallied after news that China intends on quadrupling its solar power generating capacity. Woongjin Energy and Shinsung surged 15 percent each.

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