Asian stock markets advanced Tuesday as better-than-expected U.S. data and a strong earnings surprise from Citigroup buoyed sentiment.

Japanese benchmark Nikkei surged 1.44 percent or 123.38 points to 8701.31, Chinese Shanghai Composite ended flat and Hong Kong's Hang Seng advanced 0.28 percent or 58.82 points to 21207.07 while South Korea’s KOSPI Composite gained 0.83 percent or 15.95 points to 1941.54 and Indian benchmark BSE Sensex were trading flat.

Markets opened on a strong note as the sentiment turned positive overnight following the better-than-expected September retail sales data and earnings from Citigroup Inc.  The U.S. Commerce Department said Monday that retail sales had grown for the third straight month in September, suggesting that the strength of the economic recovery in the world's largest economy is gaining some traction.

Retails sales, which measures change in the total value of inflation-adjusted sales at the retail level, rose 1.1 percent in September compared to 0.9 percent rise in August and topped Reuters estimate of 0.7 percent gain. Meanwhile, core retail sales excluding autos, grew 1.1 percent in September, compared to the 0.8 percent rise in August.

Sentiment was also lifted by surprise quarterly earnings from Citigroup. The third-largest U.S. bank reported third quarter adjusted net profit of $3.27 billion or $1.06 per share, up from $2.57 billion in the same period a year-ago and also topped Reuters estimate of $0.96 per share.

"Citigroup's earnings Monday reinforced the confidence in the health of big firms, and the markets responded. U.S. investors had been extremely cautious, but with the stream of good data, such as in retail sales data and corporate earnings, fears seem eased for now," Ryoo Yong-suk, an analyst at Hyundai Securities, told Reuters.

Concerns over the euro zone crisis eased slightly following reports that Spain may ask for financial aid by November and assurances from Greek Prime Minister Antonis Samaras that the country will secure a bailout.

Meanwhile, investors opted for caution ahead of a slew of economic data from China. The main event, the third-quarter economic activity data, will be released Thursday along with the retail and industrial production figures.

Investors are looking for signs of improvement after the recent pro-growth measures. However, The GDP data is expected to show that the world's second largest economy’s growth slowed for a seventh straight quarter to the weakest level in more than three years. Retail sales and industrial production are likely to have slowed in September on an annual basis and both will come below the consensus.

Exporter companies’ shares led the rally in Japan as the U.S. dollar strengthened against yen after retail sales data. Sony Corp. gained 2.40 percent and Toshiba Corp. surged 3.82 percent while Softbank Corp. climbed 9.57 percent after slumping in the previous session.

Financials went up across the region as positive earnings from Citigroup lifted sentiment. Standard Chartered Plc advanced 2.06 percent and HSBC Holdings Plc gained 1.01 percent in Hong Kong while Mizuho Financial Group Inc. advanced 1.64 percent.

In Seoul, SK Hynix Inc gained 2.70 percent and Korea Electric Power Corp. surged 3.33 percent while Samsung Electronics Co Ltd. gained 2.31 percent.