Asian stock markets advanced Thursday as concerns over a sharper slowdown in the world's second largest economy eased after China reported the third quarter economic activity data in line with expectations.

Japanese benchmark Nikkei climbed 2 percent or 176.31 points to 8,982.86, Hong Kong's Hang Seng advanced 0.48 percent or 102.07 points to 21,518.71 and Chinese Shanghai Composite surged 1.24 percent or 26.07 points to 2,131.69 while South Korea’s KOSPI Composite gained 0.20 and Indian benchmark BSE Sensex gained 76 percent.

The official data released by the National Bureau of Statistics showed that Chinese economy expanded at the slowest pace in more than three years in the third quarter. China's Gross Domestic Product (GDP) grew at 7.4 percent in the July-September quarter, the slowest rate since the first quarter of 2009, compared to the same period last year and in line with economists' estimate of 7.4 percent.

China's third-quarter figure was slower compared with the second quarter's 7.6 percent rise and also marked the seventh straight quarter of slower growth. Chinese economic growth has been trending steadily lower since peaking at 11.9 percent in the first quarter of 2010. The world's largest emerging economy grew 9.2 percent and 10.4 percent in 2011 and 2010 respectively.

Meanwhile, reports on retail sales, industrial production and fixed asset investment came in above the consensus, easing worries about the worsening economic conditions in the world’s second largest economy. China’s industrial production rose to 9.2 percent in September compared to 8.9 percent in August and also more than the analysts’ expectation of 9 percent while retail sales rose 14.1 percent in September on an annual basis, up from 13.2 percent in August and topped analysts’ estimate of 13.2 percent.

"The data for September suggests China's economy likely bottomed in July-August and is set to recover, and this will help ease fears about further downside risks to the Chinese economy. There aren't clear signs that demand from China is picking up but sentiment for commodities is improving and this should eventually support growth-sensitive assets," Hirokazu Yuihama, a senior strategist at Daiwa Securities, told Reuters.

Sentiment was further supported by improved U.S. economic data overnight. Building permits rose 11.6 percent to 894,000 in September and housing starts rose 15 percent to 872,000 in September, the highest level since June 2008.

Exporters and metal companies’ shares led the rally in Japan. Sony Corp. gained 2.82 percent and Toyota Motor Corp. advanced 2.45 percent while Pacific Metals Co Ltd. surged 4.85 percent.

Commodity shares led the gains in Hong Kong after economic data. Jiangxi Copper Co Ltd. surged 3.73 percent and Aluminum Corp. of China Ltd. advanced 2.56 percent while China Petroleum & Chemical Corp. 1.86 percent.