Yen gave up ground after data from Japan, the world's third largest economy, showed the flash manufacturing PMI for March tumbling to 49.1 from February's 50.1. A reading below 50.0 indicates contraction, while above indicates expansion. Other data weren't as bad, with the All Industries Activity indicator for January rising 2.0% m/m after December's 0.9% fall.

Yen slid 0.13% against the dollar to trade at 112.10, almost a one-week low, while losing a heftier 0.40% versus the euro to hover around 126.22. Britain's pound also capitalized on the Japanese currency, advancing a third of a percentage point to 161.36.

Japan's Nikkei shrugged off the negative data however, as investors hope for more stimulus measures by the central bank in the future, with the index jumping nearly two percent on short-covering to climb back above 17,000. Australian shares on the other hand were flat for the day, while China's Shanghai index slipped 0.16%, largely on profit-taking after impressive gains yesterday.

Oil prices kept muscling higher, with Brent crude futures gaining 17 cents, or 0.41% to trade at $41.70 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose also 17 cents, or 0.40% to move around $41.67 a barrel, almost taking a premium over Brent.

Investors wait for a wide array of data today, with the Eurozone's flash manufacturing PMI for the current month expected to rise marginally to 51.4 from February's 51.2, a tentatively positive sign for the common currency.

From Britain, the Consumer Price Index is expected to have risen to 0.4% y/y in February, compared to January's 0.3% growth, which would be good news for the struggling pound.