Stock markets across Asia finished the week higher. India's Sensex led the pack while Australia's ASX trailed.

Markets across Asia witnessed mixed trading at the beginning of the week, while Hong Kong stocks rallied, even as positive China factory data suggested that the world's second largest economy was improving.

China's manufacturing sector recovered in August, posting an increase in activity following three months of deterioration, thanks to 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.

Markets traded higher on 3 September after positive factory activity data from Europe and China raised hopes of a faster global economic recovery.

The eurozone's manufacturing sector continued to expand in August as member countries such as Germany, the Netherlands, Italy, Austria and Ireland showed improved growth, largely indicating a broad-based recovery. The Markit Eurozone manufacturing purchasing managers' index (PMI) rose to a 26-month high of 51.4 in August, from 50.3 in July. Economists expected a reading of 51.3 for the month.

In Australia, the country's central bank left its cash rate at a record low of 2.5% on Tuesday.

"The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target," Reserve Bank of Australia Governor Glenn Stevens said in a statement.

In company news, brokerage firm Everbright Securities lost 1% on news it could face additional losses of $436m as investors sought compensation for last month's trading glitch.

On 16 August, a two-minute trading glitch at Everbright set off some 26,000 erroneous buy orders to the Shanghai Stock Exchange (SSE). The trades, worth 23.4bn yuan (£2.45bn, €2.86bn, $3.82bn), fuelled a rally on the SSE. China's stock markets regulator said it would examine stock trading software in the country's brokerages after the incident.

Markets were mixed on 4 September as market participants took profits, following strong gains earlier this week, just as the prospect of US military action in Syria pulled down overall sentiment in the region.

President Barack Obama gained the support of key US senators for a military strike against Syrian President Bashar al-Assad's regime.

Republican and Democratic senators have concurred on a draft resolution pushing for military action. "I believe that my colleagues should support this call for action," John Boehner, Republican speaker of the House of Representatives, told reporters following the hearing.

The draft prohibits the use of ground forces and limits the intervention to 60 days.

In company news, utility firm Tokyo Electric Power (Tepco) lost 4% after Japan's nuclear watchdog said that radiation readings at the polluted Fukushima Daiichi nuclear power plant have hit a record high. The Japanese government pledged to spend close to $500m on clean-up efforts at the Fukushima disaster site.

A rally in Indian equities pushed up most markets on 5 September after India's new central bank governor rolled out plans to liberalise the financial markets.

However, uncertainty surrounding the timing of the US Federal Reserve's planned reduction in monetary stimulus capped gains outside India.

Raghuram Rajan, a former chief economist at the International Monetary Fund, took over as the chief of the Reserve Bank of India the previous day. Rajan wasted no time and announced that he plans to attract more foreign investments by subsidising hedging costs for banks. He also proposed to push for more rupee trade settlements and market liberalisation.

In Japan, the country's central bank left its monetary policy unchanged. The Bank of Japan said the world's third largest economy "is recovering moderately".

Markets outside Japan traded higher on the final trading day even as a raft of upbeat US economic data suggested that the country's Federal Reserve could taper its $85bn bond-buying stimulus in September.

Data for the month of August showed that the US services sector grew at its fastest pace in about eight years. The Institute for Supply Management (ISM) said its services index rose to 58.6, from 56 in July. The August reading is the highest since December 2005.

Meanwhile, US government data showed that weekly jobless claims dropped to a near five-year low. Weekly claims fell by 9,000 to 323,000 just as the private sector 176,000 jobs in August.

The US economy added 200,000 jobs in July, according to payroll processing major ADP.

In company news, Tepco dropped 2.5% after Japan's nuclear watchdog pulled up the firm, saying it put out "misleading" data about the recent leaks of contaminated water.

Shunichi Tanaka, chairman of the Nuclear Regulation Authority, said information provided by Tepco regarding the level of radioactive contamination was "scientifically unacceptable".

Market Movements

India's S&P BSE Sensex finished 4.71% higher at 19,270.06.

The Japanese Nikkei index ended 3.31% higher at 13,860.81.

Hong Kong's Hang Seng ended 2.44% higher at 22,621.22.

The Shanghai Composite index finished 1.69% higher at 2,139.99.

South Korea's Kospi finished 1.40% higher at 1,955.31.

Australia's S&P/ASX 200 finished 0.19% higher at 5,145.00.

The Week Ahead

The week ahead will see the US Congress vote on military action in Syria, on 9 September.

China will put out inflation data for the month of August, alongside trade balance data for the same month. The Chinese government will also release industrial production and retail sales data for the month of August.

Japan will release second-quarter GDP data alongside trade balance data for the month of July. The Bank of Japan will release the minutes of its recently held policy meeting.

The government will also release the results of the latest consumer confidence survey, conducted in the month of August, alongside industrial production and machinery orders data for the month of July.

Australia will put out labour market data for the month of August, alongside home loans data for the month of July.

ANZ will release the results of its business confidence survey while National Australia Bank will publish the results of its survey of present business conditions in the country.

The Faculty of Economics and Commerce Melbourne Institute will put out the results of its consumer confidence survey.

The Reserve Bank of New Zealand will announce its interest rate decision and follow it up with a monetary policy statement. Business New Zealand will release PMI data for the month of August.