Asian stock markets advanced slightly Tuesday after a report showed that Chinese factory activity in July grew at its fastest pace since February.

Chinese Shanghai Composite gained 0.24 percent or 5.19 points to 2146.59, South Korea's KOSPI Composite rose 02.5 percent or 4.49 points to 1793.90 and the Indian benchmark BSE Sensex advanced 0.20 percent or 33.67 points to 16911.02, while Hong Kong's Hang Seng declined 0.79 percent and Japanese benchmark Nikkei fell 0.13 percent as declines from exporter companies shares weighed.

The HSBC Flash Purchasing Managers Index (PMI), a measure of the nation-wide manufacturing, climbed to 49.5 in July, its highest level in five months, compared to 48.2 in June, soothing worries about a sharp growth slowdown in the world's second-largest economy. But the reading is still below the 50 level, signifying contracting economic activity.

However, the upward move was limited as worries over the euro zone debt crisis continued to weigh heavy on the sentiment. The Spanish benchmark 10-year bond yields soared to 7.59 percent Monday before ending the day at 7.5 percent, far higher than the 7 percent rate at which Greece, Ireland and Portugal were forced to seek financial aids, as doubt spread among bond investors that bank bailout agreed last month might not be enough to address the crisis and that a full sovereign bailout was inevitable sometime in the future.

Meanwhile, Moody’s Investors Service changed the outlook on the credit ratings of Germany, the Netherlands and Luxembourg from stable to negative, citing the increasing risk of Greece leaving the euro currency and the need for more support required for Spain and Italy to be the reasons behind the change in the outlook.

“The data gave a slight boost to markets, but whether such effects are sustainable are doubtful as Europe struggles with its problems. Government policies will underpin the Chinese economy over the longer term, but in the short-term, instability in the European situation will keep a drag, especially as Europe is a big export market for China,” Hiroyuki Kikukawa, general manager at trading company Nihon Unicom, told Reuters.

Japanese stocks ended lower, led by declines from exporter companies’ shares as the euro declined to a new 12-year low against the yen, Monday, on mounting fears that Greece may leave the euro zone and Spain will need a full sovereign bailout.

Canon Inc. fell 1.46 percent and Hitachi Ltd. declined 2.64 percent while Toshiba Corp plunged 5.43 percent after it announced that it would cut the production of NAND flash memory chips by 30 percent at its Yokkaichi plant in response to market oversupply and low prices, the Wall Street Journal reported.

In Hong Kong, HSBC Holdings fell 1.66 percent and Agile Property Holdings Ltd. declined 0.61 percent while CNOOC Ltd. plunged 4.02 percent on the news that the company agreed to acquire the Canadian energy firm Nexen for approximately $15.1 billion.

The Poly Real Estate Group gained 2.14 percent and Gemdale Corp. advanced 2.72 percent in Shanghai after the PMI data, while Shares of Samsung Electronics Co Ltd gained 0.69 percent and those of Hyundai Motor Co gained 1.83 percent in Seoul.