Shanghai outperforms Asia to end week 1% higher after upbeat data

China's benchmark index outperformed Asia on Friday to end the week in positive territory after a raft of economic data painted an upbeat picture of the world's second largest economy.

Amid gainers, the Shanghai Composite ended above the 2,050 mark and Japan's Nikkei was flat. Australia's S&P ASX 200 and South Korea's Kospi eased 0.2 percent each.

For the week, the Nikkei was Asia's worst-performing index, down 6 percent while the Shanghai Composite was Asia's biggest winner, up over 1 percent.

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China data deluge

Focus in Asia was on a raft of mostly positive Chinese economic data for the month of July.

Industrial output data rose a stronger-than-expected 9.7 percent from a year earlier while retail sales data jumped an annual 13.2 percent, in-line with market forecasts for a 13.5 percent gain. Fixed-asset investment increased an annual 20 percent from January-July, data from the National Bureau of Statistics showed.

On a less bright note, consumer prices were unchanged from the previous month and producer prices fell an annual 2.3 percent.

"More spending is called for, while further acceleration in credit growth is discouraged. This approach requires significant improvement in capital allocation efficiency to work. There is no quick magic, and so patience and tolerance is still required," said analysts at SG Global Economics in a research note.

Shanghai above 2,050

China's benchmark stock index erased earlier losses after sinking to a one-week low of 2,030 points as investors digested the latest economic data.

"The key point is the deflation in the PPI, which speaks to the capacity in industry and that, in turn, reflects one of the structural vulnerabilities in the economy," said Andrew Colquhoun, senior director and head of Asia-Pacific sovereign ratings at Fitch Ratings. "We think over-investment in the past is driving this deflation in the PPI," he added.

Gains in commodity stocks pushed the index into positive territory. Rare-Earth surged 10 percent and Zijin Mining rose 3.7 percent.

Nikkei flat

A marginally weaker yen helped Japan's benchmark index rebound from the previous day's one-month low. Dollar-yen traded at the 96.60 handle after hitting a new seven-week low overnight. The currency pair has lost over 3 percent since rising to 99.9 last week.

Materials and industrial exporters led the recovery. Metals firm Mitsubishi Materials jumped 10 percent while truck maker Isuzu Motors rallied 2.4 percent. Index heavyweight Softbank rose 1 percent on reports that the wireless carrier could be raising the biggest syndicated loan in the Asian region.

(Read more: Why the Bank of Japan is right to stay 'passive')

Camera maker Nikon slumped over 14 percent after reporting a 72 percent net-profit slump in the April-to-June quarter due to a steep fall in sales.

Australia dips 0.3%

Australia's benchmark index pulled back after rallying 1 percent in the previous session but a rally in mining stocks capped larger losses on the index on the back of higher metal prices.

Fortescue Metals led gains by 5 percent while Mount Gibson Iron added 3 percent. Rio Tinto rose 1.3 percent despite reporting an 18 percent drop in first-half net profit late on Thursday.

(Read more: Here's how you can trade Australia elections)

The Australian dollar extended the previous day's strong gains to rise above the $0.91 handle after the Reserve Bank of Australia trimmed its growth forecast at its latest quarterly policy statement.

Kospi steady

South Korea's benchmark index closed just above a two-week low at the 1,876 mark, which it hit earlier in the session as exporters lost ground on the weaker Japanese yen.

Tech giant Samsung Electronics increased 1 percent ahead of a ruling by the U.S. International Trade Commission (ITC) on a ban of Samsung imports in the U.S.

(Read more: Product ban? Samsung won't be sweating it)

Automaker Hyundai Motor and Kia Motors lost over 1 percent each but smartphone maker LG Electronics added 2.8 percent after the launch of its new smartphones early Thursday.

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