China's official manufacturing Purchasing Managers' Index (PMI) came in at 50.2 for March, above a forecast of 49.3 from a Reuters poll, returning to growth for the first time since July. A similar improvement was seen in the Caixin manufacturing PMI for March, which rose to 49.7 from 48.0 in February, marking the first increase from the previous month in a year. Levels above 50 indicate expansion.

The segments that posted the largest gains were 1) new orders at 51.4 (February: 48.6); 2) new export orders at 50.2 (February: 47.4); and 3) output at 52.3 (February: 50.2). The employment component remained soft albeit higher at 48.1 (February: 47.6). Inventories of raw materials remained weak at 48.2 (February: 48.0) reflecting the overcapacity situation. The services PMI was also firmer at 53.8 from 52.7 in February.

"Seasonal factors may have contributed to strong the rebound, as seen in March 2011 and 2012." said Commerzbank in a report.

Upbeat data failed to lift sentiment. Chinese markets were mixed, with the Shanghai composite closed up 0.17 percent, or 5.0645, at 3,008.979 and the Shenzhen composite closed down 0.56 percent, or 10.694 points, at 1,901.515. Hong Kong's Hang Seng index closed down 1.34 percent, or 277.78 points, at 20,498.92.