Asian stock markets mostly advanced Tuesday as sentiment turned positive overnight on hopes that U.S. lawmakers will soon arrive at a consensus to avoid the "fiscal cliff.”

South Korean KOSPI Composite gained 0.64 percent or 12.08 points to 1890.18, India's BSE Sensex gained 0.12 percent and Taiwan Weighted Index rose 0.23 percent while Japanese benchmark Nikkei declined 0.12 percent or 10.56 points to 9142.64, Hong Kong's Hang Seng slipped 0.19 percent and Chinese Shanghai declined 0.40 percent.

Markets opened on a positive note, following the overnight rally on Wall Street with the Dow Jones Industrial average surged 1.7 percent or 207 points as investor sentiment turned positive amid hopes that President Barack Obama and the Congressional leaders are making advances in reaching conciliation to avert the “fiscal cliff,” a term used to describe a raft of tax increases and spending cuts that will automatically be poised to start next year if nothing is done.

Sentiment was further supported by encouraging housing data, with home builders’ confidence and existing home sales beating expectations. The National Association of Home Builders said Monday its home builders' confidence index jumped to the highest since May 2006 while the National Association of Realtors home sales report showed that existing home sales unexpectedly rose to 4.79 million units in October from upwardly revised 4.69 million units in the previous month.

However, the upward move was limited as concerns over the euro zone debt crisis revived after Moody's joined Standard & Poor's in removing France's triple-A sovereign debt rating, leaving the country with a triple-A rating from Fitch. Moody's Investors Service slashed France's government bond rating to AA1 from AAA and kept its negative outlook, citing the country's uncertain fiscal outlook and deteriorating economic prospects.

“Moody's news is certainly not positive but market reaction seems contained. Trading was getting lighter ahead of the U.S. Thanksgiving holiday weekend. Given the recent market rally, the rest of the week is likely to be spent on adjusting positions before the long weekend, with any uptick giving way to profit taking,” Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo, told Reuters.

Meanwhile, the Bank of Japan kept its key policy rate unchanged and refrained from announcing any monetary easing measures in spite of the political pressures to pursue aggressive stimulus steps for reviving the economic growth momentum.

In Tokyo, Mitsui OSK Lines Ltd. surged 3.55 percent and NTN Corp. gained 2.82 percent while Advantest Corp. and Panasonic Corp. declined 2.35 percent and 3.78 percent respectively.

Energy shares went up across the region. Inpex Corp. advanced 0.55 percent and Japan Petroleum Exploration Co. gained 1.27 percent in Tokyo while CNOOC Ltd. advanced 1.25 percent in Hong Kong.

In Hong Kong, HSBC Holdings Plc gained 0.54 percent and Tencent Holdings Ltd. advanced 2.28 percent while Tingyi Holding Corp. plunged 3.70 percent after the company stock was downgraded to an “underweight” rating from “neutral” rating at JP Morgan.

Chinese shares declined after the data released by the Commerce Ministry showed that foreign direct investment (FDI) inflows into China fell in October compared to that in the same month last year, as investors, who are concerned about the renewed debt crisis in the euro zone and also increasing trade relations with Japan, cut down on spending.