Trade was also weighed by news that the Japanese economy did not grow as much as previously thought in the final quarter of 2009.

China's National Bureau of Statistics said the consumer price index, the main gauge of inflation, rose 2.7 percent year-on-year last month, much faster than the 1.5 percent rise recorded in January.

The news led Chinese shares 0.45 percent down in the afternoon as dealers digested the news, while Hong Kong dropped 0.35 percent by the break.

Data also showed new lending slowed to 700.1 billion yuan (US$102 billion) in February, from the previous month's 1.39 trillion yuan as Beijing tries to restrict liquidity in a bid to put the brakes on the red hot economy.

The figures have caused concern there will be further restrictions.

"While we continue to believe that policy normalisation/tightening should be gradual and measured this year, another reserve requirement ratio hike is likely imminent," Morgan Stanley analyst Wang Qing told Dow Jones Newswires.

China has taken steps to calm inflationary pressures by ordering banks to increase their capital reserves three times since December - effectively limiting the amount of money they can lend.

And Qian Qimin from Shenyin Wanguo Securities said: "The tightening concerns are still lingering."

Sydney closed 0.12 percent, or 5.8 points, off at 4,814.2 after data showed unemployment rose to 5.3 percent in February from January's revised 5.2 percent.

CMC Markets analyst David Taylor also said China's inflation figures had tempered Australian trade, particularly in resources stocks.

BHP Billiton eased 0.53 percent to A$43.01, while Rio Tinto edged up 0.27 percent to 75.55.

Seoul closed 0.34 percent, or 5.62 points, lower at 1,656.62 after South Korea's central bank held the key interest rate at a record low 2.0 percent for a 13th straight month.

Markets broadly ignored upbeat U.S. data, which showed wholesale inventories unexpectedly fell 0.2 percent in January. Analysts had expected inventories to rise 0.2 percent.

The government report also said sales by U.S. wholesalers in January rose 1.3 percent to a seasonally adjusted US$346.7 billion.

Despite data showing Japan's economy grew 0.9 percent in October-December from the previous quarter, down from an initial estimate of 1.1 percent, the Nikkei picked up due to a weaker yen.

Tokyo rose 0.96 percent, or 101.03 points, to 10,664.95

Exporters were the main winner, getting a boost from a weaker yen in New York trade on Wednesday. Sony advanced 1.9 percent to 3,440 yen and Honda rose 0.77 percent to 3,270 yen.

The dollar had jumped to 90.49 yen in New York late Wednesday from 89.96. However, it retreated slightly in Asia to 90.35.

The euro rose to US$1.3646 in afternoon trade after Beijing released the figures, rebounding from earlier lows, although it was still down from its level of 1.3657 in New York late Wednesday.

The euro declined to 123.29 yen from 123.60.

The Reserve Bank of New Zealand earlier kept its rate unchanged, but signalled the first rise was likely around the middle of the year.

Thailand kept its rates steady Wednesday citing political uncertainty.

Singapore dropped 0.13 percent in the afternoon.

Investors were waiting for a central bank meeting in the Philippines later yesterday.

Oil was lower, with New York's main contract, light sweet crude for April delivery, US$0.53 down at US$81.56 a barrel.

London's Brent North Sea crude fell US$0.49 to US$79.99.

Gold opened lower at US$1,111 to US$1,112 an ounce in Hong Kong, from Wednesday's close of US$1,122 to US$1,123.

In other markets:

Taipei ended 0.38 percent, or 29.42 points, lower at 7,749.66.

Taiwan Semiconductor Manufacturing Co was unchanged at NT$61.4.

Manila closed 0.19 percent, or 5.93 points, higher at 3,125.56.

Wellington ended flat, edging 2.75 points lower to 3,223.45.

Macquarie Equities broker Brad Gordon said the central bank's comments on likely future interest rate rises were generally supportive of equities.