Japan's benchmark Nikkei surged 1.10 percent or 97.44 points to 8,978.60, South Korea's KOSPI Composite surged 1.96 percent or 37.36 points to 1,940.59 and Hong Kong's Hang Seng gained 1.02 percent or 203.95 points to 20,269.47 while Chinese Shanghai Composite gained 0.61 percent and India's benchmark BSE Sensex was trading flat.
Data from the National Bureau of Statistics showed that inflation in the world's second largest economy declined for the fourth straight month in July, rising hopes that Beijing would now have more room for policy easing to stem a growth slowdown. Consumer prices index (CPI) rose 1.8 percent on annual basis in July, the lowest level in 30-months, compared to 2.2 percent increase in June.
The latest data added to growing optimism that the major central banks around the world would soon announce a new round of stimulus measures to spur economic growth. Speculations are running high that the ECB would shortly take policy action to lower the peripheral bond yields of struggling nations such as Italy and Spain.
"This number gives more room for policy easing. It is now pretty clear that CPI will likely be below the official 4 percent target for the year, so the policy focus for the government can stay clearly on growth," Zhang Zhiwei, chief China economist at Nomura in Hong Kong, told Reuters.
Japanese shares advanced led by gains from exporters and steel makers. JFE Holdings surged 4.03 percent and Kobe Steel Ltd. advanced 1.39 percent while Sharp Corp advanced 1.60 percent and Panasonic Corp. surged 2.12 percent.
The Bank of Japan left its key policy rate unchanged and refrained from announcing any monetary easing measures citing that the country's economy is picking up moderately. Core machinery orders increased a less-than-expected rate of 5.6 percent in June after plunging 14.8 percent in the previous month.
Financial and developer companies' shares led the gains in Hong Kong. HSBC Holdings Plc gained 1.33 percent and Bank of China Ltd advanced 1.35 percent while Poly Hong Kong Investments Ltd rallied 9.25 percent.
The Bank of Korea (BoK) disappointed by keeping its key policy rate unchanged at 3.00 percent. However, market participants are optimistic that the BoK will cut the repurchase rates from 3.00 percent to 2.75 percent at the next meeting in September as the worse than expected deterioration in economic conditions definitely puts pressures on the central bank to add stimulus.
Kia Motors Corp surged 2.90 percent and Hana Financial Group Inc. went up 3.38 percent while Samsung Electronics rose 1.52 percent.