Asian markets outside China traded higher on 17 December as positive economic data from the US and Europe boosted investor sentiment.

However, gains across the region were capped, ahead of an important US Federal Reserve policy decision.

The Japanese Nikkei finished 0.83%, or 125.72 points, higher at 15,278.63.

Australia's S&P/ASX finished 0.27%, or 13.60 points, higher at 5,103.20.

South Korea's Kospi finished 0.23%, or 4.59 points, higher at 1,965.74.

The Shanghai Composite finished 0.45%, or 9.78 points, lower at 2,151.08.

Hong Kong's Hang Seng finished 0.20%, or 45.43 points, lower at 23,069.23

India's BSE Sensex was trading 0.23%, or 47.52 points, higher at 20,707.04.

Data from the US showed that factory output in November exceeded its prerecession peak for the first time, the latest signal suggesting America's economic recovery has gathered momentum.

Industrial production, which measures the output of US manufacturers, utilities and mines, jumped a seasonally adjusted 1.1% from the preceding month, the Federal Reserve said on 16 December. That November reading was the biggest jump in a year.

Earlier, private industry data showed that the long-awaited eurozone recovery is "back on track".

Markit's flash composite eurozone purchasing managers index (PMI) for December hit 52.1, up from November's 51.7 and rounding off the strongest quarter since the first half of 2011.

In Australia, the local currency rose after minutes of the Reserve Bank of Australia's 3 December policy meeting showed the central bank could cut interest rates again in 2014.

The Aussie remained "uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy," the minutes said.

The Fed will announce its monetary policy decision on 18 December. The central bank could reveal a reduction in its $85bn-a-month bond buying stimulus on Wednesday.

BofA Merrill Lynch Global Research said in a note to clients: "The December FOMC meeting will be busy: in addition to the usual statement, the FOMC will also update its Summary of Economic Projections (SEP) and chairman Bernanke will give his final press conference. And there will be lots of things to talk about: tapering, forward guidance, and the 'dot plot' of year-end rate forecasts among these."

"Our base case remains for the Fed to start tapering in 1Q next year, although the odds of a December taper have risen recently. We look for the Fed to strengthen its forward guidance over the course of 2014, but expect at most additional qualitative refinements at this meeting," the American bank added.

Wall Street Up

On Wall Street, indices ended higher on 16 December, ahead of the Fed decision.

The Dow finished 129.21 points, or 0.8%, higher at 15,884.57.

The S&P 500 ended 11.22 points, or 0.6%, higher at 1,786.54.

The Nasdaq closed 28.54 points, or 0.7%, higher at 4,029.52.

"The economy is on a roll, and tapering is not a concern for the market anymore. I've been calling for the Fed to take action this month, and I think they will, but this month or January is irrelevant at this point," said Peter Cardillo, chief market economist at Rockwell Global Capital.

"I don't expect them to do it by much, they don't want to shock the markets," Cardillo told CNBC.

Company Stock Movements

In Tokyo, Kawasaki Heavy gained 2% after the Japanese government announced that it would increase military spending.

In Mumbai, Apollo Tyres jumped 7.1% after Cooper Tire & Rubber lost its US court bid on 16 December to force the Indian tyremaker to finish their proposed $2.3bn merger.

Mahindra & Mahindra Financial Services gained 1.7% after its inclusion in the National Stock Exchange's (NSE) derivatives market, reported Reuters.

In Sydney, Fortescue Metals rallied 3% and rival Rio Tinto added 1% on the back of higher copper prices.

In Seoul, SK Telecom shot up 3%. Rival KT gained 1.5% on news that it had nominated former Samsung president Hwang Chang-Gyu as chairman.