Asian markets witnessed mixed trading on Monday, while Hong Kong stocks rallied, even as positive China factory activity data suggested that the world's second largest economy was improving.

The Japanese Nikkei finished 1.37% higher or 184.06 points at 13,572.92.

Australia's S&P/ASX finished 1.04% higher or 53.30 points at 5,188.30.

South Korea's Kospi finished 0.08% lower or 1.55 points at 1,924.81.

Hong Kong's Hang Seng was trading 1.76% higher or 382.19 points to 22,113.56.

The Shanghai Composite was trading 0.11% lower or 2.29 points to 2,096.09.

China's manufacturing sector recovered in August as it posted an expansion in activity following three months of deterioration, thanks to the stimulus measures announced by the government.

The HSBC manufacturing purchasing managers' index (PMI) showed a final reading of 50.1 in August, up from an 11-month low of 47.7 in July. The reading, however, slightly missed economists' expectations of 50.2. Earlier, government data showed that manufacturing PMI rose to 51.0 in August compared with 50.3 in July.

US President Barack Obama's decision to defer military strikes against Syria provided momentary relief to regional markets.

In an address to the American people on 31 August, Obama said he intended to take military action over Syria's alleged use of chemical weapons, but would seek the support of Congress in authorising air strikes. Any strikes will not now take place until Congress convenes to debate the action on 9 September.

Most markets across the region finished the week ended 31 August and the month lower. For the week, South Korea's Kospi led the pack while the Japanese Nikkei trailed. For the month of August, the Shanghai Composite was ahead while the Japanese Nikkei lagged behind.

Wall Street Down

On Wall Street, indices ended lower on 30 August amid uncertainty surrounding a possible US-led military strike on war-torn Syria.

The Dow finished 30.64 points lower at 14,810.31, pulled down by Alcoa and Verizon. The S&P 500 closed 5.20 points lower at 1,632.97, while the Nasdaq ended 30.43 points lower at 3,589.87.

For the month, the three indices logged their worst declines since May 2012. The Dow lost 4.45%, the S&P 500 dropped 3.13%, and the Nasdaq shed 1.01%.

"Fear driven selling over a possible military strike in Syria has presented a good buying opportunity for investors. With the vote from Congress not likely to occur until next week, and with the vote also likely to reflect broader negative sentiment from the voting population, just like in the UK, Syria will soon be forgotten by investors, with taper concerns again becoming the leading worry," said Tim Radford, global analyst at Rivkin Securities.

However, "with tapering already largely priced into asset prices, reduced uncertainty levels could see some decent upside in US equities leading into Friday's jobs data," Radford added.

Company Stock Movements

In Tokyo, exporters' stocks gained on a stronger US dollar. Pharmaceuticals firm Daiichi Sankyo moved up 3%, while Mitsubishi Electric added 2.9%.

Automaker Isuzu Motors added 1.8% while Japan Tobacco moved up 1.7%.

Utility firm Tokyo Electric Power (Tepco) fell 6% on reports of an 18-fold spike in radiation levels near a storage tank containing contaminated water at its crippled Fukushima Daiichi nuclear power plant.

In Hong Kong, China Shenhua Energy shot up 3.3%, casino operator Sands China gained 2.5% while China Construction Bank gained 2.1%.

China Railway Construction shot up 4.7% and China Railway Group gained 3.5% after both companies reported an over 45% jump in first-half profits.

Aluminum Corp. of China (Chalco) rose 1.9% in Hong Kong even after it reported a first-half net loss of 623.8m yuan ($101.9m).

In Shanghai, China Railway Construction added 2.4% while China Railway Group rose 1.5%.

In Sydney, surf-wear retailer Billabong surged 13% after its fourth largest shareholder, New York-based hedge fund Coastal Capital International, called for a board shakeup.

Iron-ore miner Fortescue Metals shot up 3.3% while Anglo-Australian miner Rio Tinto rose 2%.

Westpac Banking moved up 1.3% while Commonwealth Bank of Australia inched up 0.3% ahead the Australian central bank's interest rate decision due out on Tuesday.

In Seoul, Kia Motors and part owner Hyundai Motor added 3% each.