Asian stocks end at session highs; Nikkei leads gains by 2.6%

Asian equity markets ended at session highs on Tuesday with Japan's benchmark index leading gains by 2.6 percent as the yen weakened on news of corporate tax cuts.

The Nikkei index hit a three-day high, Australia's S&P ASX 200 rose to it's highest level in nearly three months and South Korea's Kospi hit a one-week high. The Shanghai Composite meanwhile, hit a near two-month high.

ASX 200
CNBC 100

Nikkei 2.6% higher

A weaker yen helped Japan's benchmark index bounce off the previous session's six-week low. Dollar-yen rose above the 97 handle but still remains nearly 3 percent lower from a high of 99.9 hit earlier this month.

News of corporate tax cuts helped boost sentiment. The Nikkei newspaper reported that Abe has called for a study on lowering the current corporate tax rate as a way to attract foreign-capital and boost growth in an attempt to offset the impact of a sales tax-hike.

"It seems logical that traders have been a little surprised by the timing of the potential cut, and seems to back the idea that an increase in sales tax in April 2014 is looking promising; although we feel the real risk is it comes out in 1 percent increases over five years, as opposed to a two-tiered strategy," wrote Chris Weston, market strategist at IG.

(Read more: Hiking Japan's sales tax: why it's now or never)

Index heavyweight Softbank jumped 6.3 percent while consumer electronics makers Sharp and Panasonic rose 4 percent each.

In earnings news, Taiko Pharmaceutical surged 10 percent after reporting that it's quarterly net profit tripled while dairy product maker Meiji Holdings added 3 percent after reporting a 243 percent rise in net profit.

June machinery orders fell 2.7 percent from the previous month, but that was still better than forecasts for a 7.2 percent decline. The data shows that the government's stimulus policies have yet to encourage firms to ramp up capital spending, which Prime Minister Abe has repeatedly stressed as a major driver of economic growth.

Shanghai above 2,100

China's benchmark index hit its highest level since June 20 on rising economic sentiment. Cyclical stocks such as cement makers led the gains with Shangfeng Cement up 10 percent and Jiangsu Shagan higher by 7 percent.

Property stocks were in focus after that the city of Wenzhou has become the first to ease restrictions of property purchases. First-time buyers there can now purchase two houses, which has been banned by China's government as part of a campaign to cool rising prices.

Real estate developers Gemdale and Shanghai Shimao rose 1 percent each.

(Read more: The Chinese are coming... for New York Queens)

Elsewhere, banks rallied after China's central bank injected more short-term funds into money markets to ensure a stable supply of liquidity and keep rates stable. China Minsheng Banking led gains by nearly 2 percent.

Sydney hits highs

Australia's benchmark index rose above 5,120 points to hit its highest level in nearly three months, a day after hitting a one-week peak in the previous session.

Banks led the rally with 1 percent gains in Australia New Zealand Banking, Commonwealth Bank of Australia (CBA) and National Australia Bank ahead of CBA's earnings on Wednesday.

Miners pared gains after the nation's Treasury warned that mining investment could fall sharper than expected, offsetting optimism over higher gold and iron ore prices. Fortescue Metals inched up 0.2 percent following a 4 percent spike earlier while Atlas Iron added 5.5 percent.

Alacer Gold climbed over 6 percent after announcing a leadership change and saying that the sales process for its Australian assets are well underway.

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Shares of property trust Stockland fell 3 percent after reporting a 79 percent plunge in full-year net profit and warned that a recovery in the housing market would be uneven.

Kospi up 1.2%

South Korea's benchmark index crossed the 1,900 for the first time in a week thanks to a rally in chip makers and techs on bargain hunting.

Samsung Electronics and SK Hynix increased nearly 5 percent each, LG Display rose 1.6 percent and LG Electronics added 0.8 percent.

Meanwhile, automakers Hyundai Motor added nearly 3 percent while Kia Motors rose 2 percent.

Metal makers continued to rally on signs of stabilization in China's economy. Posco added over 1 percent after rising 2 percent on Monday, Korea Zinc rose 3.7 percent and Dongkuk Steel increased over 1 percent.

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