Japanese markets surged after the government revised its economic forecast for the fiscal year to next March. It is believed that a record $785 billion budget unveiled for the next fiscal year will boost consumption and capital expenditure.

Investors shrugged off mixed data pointing to uneven economic recovery. Japan's industrial production fell more than expected in November, while retail sales posted modest growth. The unemployment rate for November remained at 2.6 percent, matching forecasts.

The Nikkei average rose 0.68 percent to 50,750.39 while the broader Topix index settled 0.15 percent higher at 3,423.06. Among the prominent gainers, Fast Retailing, SoftBank and Advantest all rose around 2 percent.

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