Asian stock markets mostly declined Monday as concerns over the U.S. fiscal cliff continued to weigh on the sentiment.

Chinese Shanghai Composite surged 1.33 percent or 29.74 points to 2,262.99 and India’s BSE Sensex fell 0.13 percent or 24.71 points to 19,420.13 while Hong Kong's Hang Seng declined 0.04 percent in the shortened session. Markets in Japan and South Korea are closed for a public holiday.

Investors remained concerned that the U.S. lawmakers might fail to reach a budget deal to avert the $600 billion spending cuts and tax hikes that threaten to push the world’s largest economy into a recession early next year.

“With slightly over 24 hours left, there is little time (before Dec 31) to iron out the fundamental differences between the Democrats and Republicans. Nonetheless, we are cautiously optimistic that an agreement could still be struck by the end of this year on stopgap measures with regard to tax extensions and spending issues," Ng Weiwen, a macro analyst at Singapore-based Phillip Securities, said in a note, the Wall Street Journal has reported.

However, the downward move was limited as encouraging Chinese manufacturing data offered support. A private sector survey Monday showed that China's manufacturing activity expanded to a nineteen-month high in December, suggesting that the world’s second-largest economy is reviving its growth momentum.

The final reading of HSBC Flash Purchasing Managers Index (PMI), a measure of the nation-wide manufacturing, climbed to 51.5 in December from its preliminary reading of 50.9 and November’s reading of 50.5.

Meanwhile, South Korea's consumer price inflation rose 1.4 percent in December, down from a 1.6 percent gain in November and below the analysts’ estimation of 1.5 percent, indicating that the country’s inflationary pressures are declining to provide room for further monetary easing policy measures required to boost economic growth.

Chinese shares rallied after the release of the manufacturing data. China Life Insurance CO Ltd. climbed 6.53 percent and Ping An surged 4.52 percent while Bank of Communications Co Ltd. gained 3.11 percent.

Property developers and brokerage firms gained in Hong Kong. Hang Lung Properties advanced 1.32 percent and China Overseas Land & Investment Ltd. rose 0.65 percent while China Everbright Ltd and Haitong Securities Co Ltd. gained 3.46 percent and 2.15 percent respectively.