Asian shares rose on Monday as financial shares clawed back some of last week's losses and higher oil prices buoyed energy stocks, but gains were capped by fears of futher outflows from emerging equities to developed markets.
Market players said emerging Asian stock markets may continue to underperform compared to developed markets such as Japan and the United States.
Japan's Nikkei average reversed early losses and ended higher on Monday, with its rise seen
helped by futures-led buying due to a weaker yen against the euro and to month-end window-dressing.
The benchmark Nikkei added 0.9 percent or 97.33 points to 10,624.09. The broader Topix advanced 1 percent to 951.27.
Mizuho Trust & Banking and two other subsidiaries of Mizuho Financial Group were big winners, after a source told Reuters the Japanese bank plans to buy them out in a deal worth about $4 billion.
Shares of Mizuho Securities gained 12.1 percent to 251 yen in heavy volume, while Mizuho Investors jumped 7 percent and Mizuho Trust rose 6 percent.
Mizuho Financial Group, Japan's second-largest bank by assets, closed 1.8 percent higher.
NEC fell 3.4 percent to 225 yen after it slashed its full-year earnings forecast on Friday, and Goldman Sachs downgraded the stock to "neutral" from "buy" and removed it from its "conviction buy" list.
Seoul shares dipped on Monday weighed by falls in LG Electronics <066570.KS> and transporters including Korean Air <003490.KS>amid continued gains in crude oil prices.
The Korea Composite Stock Price Index (KOSPI) ended down 1.23 percent at 1,939.30 points.
LG Electronics tumbled 5.1 percent after the Taiwanese dollar weakened in recent sessions from a 13-year high hit earlier this month, sending shares in smartphone maker HTC up 7 percent. A weaker Taiwanese dollar is seen hurting the competitive price comparisom of South Korean smartphones.
Defence issues jumped after North Korea threatened to fire across a land border with South Korea if Seoul continued its anti-North psychological campaign. [ID:nL3E7DR018]
Military equipment producers Victek and Huneed Technology rose 2.7 percent and 2.4 percent respectively.
But construction issues retreated, as the civil unrest in Libya deepened concerns about their operations in the Middle East. Daewoo Engineering & Construction extended losses, closing down 6.9 percent and Samsung Engineering declined 4.5 percent.
Australian stocks fell 0.4 percent as gains in miners and energy firm Woodside were countered by weaker banks and insurers, and declines in many companies trading exclusive of dividend.
Capturing attention was news copper miner Equinox Minerals plans to make a bid for Canadian base metal miner Lundin Mining.
Australian stocks fell on Monday as gains in big miners and energy stocks were outweighed by declining banks and insurers, and weakness in many industrials as they traded exclusive of dividend.
The benchmark S&P/ASX 200 closed down 0.1 percent after the trading session was truncated by over an hour due to a trading glitch.
Miners gained after copper prices recovered quickly from recent lows, with BHP Billiton ending 0.4 percent higher at A$46.11 and Rio Tinto up 1.2 percent at A$84.93.
As competition for increasingly valuable copper deposits heats up, Equinox Minerals made a trumping offer for Lundin Mining, which it said valued Lundin at C$4.8 billion as it looks to create a half-million-tonne-per-year copper producer in 5-6 years.
A number of shares declined on Monday as the ex-dividend date fell, weighing on the likes of packager Amcor,steel maker BlueScope and Bendigo Bank.
QBE Insurance, Australia's biggest insurer, fell 1.4 percent after a 16 percent drop in full-year net profit, hurt by lower investment yields and higher claims.
Coal freight company QR National rose 4.2 percent to A$3.20 after its first-half net profit came in above expectations. It forecast underlying earnings, before interest and tax, of A$380-410 million in 2011.
Fortescue Metals rose 2.2 percent after it found 1 billion metric tons of high grade iron ore deposit and said that first estimate was expected to grow. The deposit is near Fortescue's Cloudbreak operation and the company wants to develop it as fast as possible.
Woodside Petroleum rose 1.1 percent after U.S. crude futures jumped by nearly $2 towards $100 a barrel on Monday.
Contractor Downer EDI plans to raise A$279 million through a rights offer, the firm said on Monday, after The Australian newspaper reported it has run into cost blowouts on a A$1.9 billion contract to supply trains for Sydney's suburban network.
Shanghai shares rose as optimism ahead of the annual parliamentary session that begins on Thursday encouraged investors to buy into financials and manufacturing-related stocks.
The benchmark Shanghai Composite Index ended up 0.9 percent at 2,905.1 points. The index rose 4.1 percent in February making it Asia's top performing market for the month.
Hong Kong markets extended gains as investors geared up for earnings results from big names such as HSBC. The Hang Seng Index climbed 1.5 percent. HSBC was up 1.4 percent ahead of its results, along with other Hong Kong heavyweights. Bank of China, China Mobile and ICBC all gained.
Hong Kong's Hutchison Whampoa's ports unit is looking to raise as much as $5.8 billion in an initial public offering (IPO) in Singapore, allowing investors to tap into China's booming infrastructure business.
It would be Southeast Asia's biggest ever listing, and the first publicly traded business trust backed by port assets, according to the prospectus.
Shares of Hutchison Whampoa in Hong Kong rose over 2 percent.
Singapore stocks, meanwhile, were down 0.2 percent weighed by ongoing concerns that tensions in Libya would spread and news that China had cut its economic growth target for the next five years.
Shares of CapitaMalls Asia, which owns shopping malls, fell as much as 4.5 percent as investors pulled out some funds ahead of a S$1.1 billion initial public offering of Perennial China Retail Trust, traders said.
Perennial China, which will own five shopping malls in China, said in its prospectus it is offering 1.1 billion shares at S$1.00 a piece. The sale of theshares to the public will start next week.
However, commodity firms such as Noble and Olam International outperformed the broader market, boosted by higher commodity prices
India's main stock index, the Sensex extended gains to more than 2 percent on Monday, after the country's Finance Minister presented a populist annual budget that increased social spending by 17 percent.
The FTSE CNBC 100 Index was up 0.9 percent.