Asian mostly higher after US gains but Syria fears remain

Asian equities were mostly higher on Thursday as sentiment improved following a positive handover from Wall Street but ongoing tensions in the Middle East limited gains.

Japan's Nikkei crossed the 13,400 mark, South Korea's Kospi jumped to a seven-day high and Australia's S&P ASX 200 ended flat. But the Shanghai Composite bucked the trend to dip 0.2 percent.

"It has been a fairly quiet session in Asian trade, as investors remain on headline watch despite a somewhat calmer situation on the Syria front. Some reports downgraded the threat of a strike from imminent to measured and this relieved equities from some of the pressure they've been under since the Syria threat escalated," said Stan Shamu, market strategist at IG in a note.

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In a televised interview on PBS, President Obama said that a "tailored, limited" military strike against Syria could be a strong enough message to deter the future use of chemical weapons, but added that he had not yet made a decision on military action.

(Read more: Selling on Syria likely short-lived, going by history)

Rising oil prices amid speculation about intervention in Syria boosted U.S. energy stocks overnight, helping Wall Street reverse two-straight sessions of losses.

Nikkei up 0.9%

Japan's benchmark index moved off the previous day's one-week closing low as the yen rose above the 97 handle against the greenback, rebounding from Wednesday's two-week high of 96.83.

Power companies dragged on the index. Tokyo Electric Power lost 2.5 percent after Japan's nuclear regulator raised the severity level for the latest radioactive leak at the Fukushima nuclear plant. Kansai Electric Power dropped 5.6 percent while Chubu Electric Power declined 3.6 percent.

(Read more: Is nuclear disaster looming in Japan?)

Investors also shrugged off weak economic data. Retail sales for July inched down 0.3 percent from the year before, defying Reuters forecasts for a 0.6 percent annual increase.

"If there's one economy in the world where you're not going to influence spending behavior, its Japan. It's linked to this re-risking, trying to encourage consumers to take more risks in their portfolios in the way they save. It may be possible in other parts of the world but in Japan, it encourages them to save more if the rate is coming down on their savings," said Mark Konyn, CEO of Cathay Conning Asset Management.

Kospi rallies 1.5%

South Korea's benchmark index jumped to its highest level since August 20 after seasonally adjusted current account surplus edged up in July from the previous month thanks to increasing exports.

Blue-chip stocks led the gains with Samsung Electronics up 2.7 percent and Hana Financial up nearly 3 percent on heavy foreign buying.

Petochemical stocks pared earlier gains as Brent crude fell below $116 a barrel.. SK Innovation and S-oil closed up 0.3 percent after an earlier 1 percent spike while LG Chemical added nearly 2 percent .

Shanghai 0.2% lower

China's benchmark index gave up early gains in rangebound trade with financials in focus on the back of earnings reports. Agricultural Bank of China rose 0.4 percent after reporting a 22 percent rise in quarterly profit.

Weakness in the mining sector weighed on the index. Baoshan Steel fell over 1 percent while Jiangxi Copper lost 3.5 percent and Zhongjin Gold fell 2 percent on the back of lower metal prices.

(Read more: For China inflation hawks, it's time to watch pigs)

Sydney flat

Australia's benchmark index reversed earlier losses to approach the 5,100 level but caution ahead of elections next week capped any further gains.

In earnings news, flagship carrier Qantas surged 14 percent after doubling its underlying annual profit while shopping mall operator Westfield Group fell 0.7 percent after its first-half revenue dipped 0.3 percent.

Gold miners weighed on the index after bullion broke its five-day rally. Kingsgate Consolidated slumped 22 percent while Perseus Mining tanked 11 percent and Medusa Mining declined 8 percent.

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