Asia-Pacific markets trade mixed as investors assess China's industrial profit data, Tokyo CPI

Asia-Pacific markets were mixed Friday, as some markets return from the Boxing Day holiday and investors assessed economic data from the region.

China's industrial profits extended declines to a fourth straight month, dropping 7.3% in November from a year earlier, signaling that Beijing's stimulus measures have yet to meaningfully stem the slide in corporate earnings. Hong Kong's Hang Seng Index added 0.39% while mainland China's CSI 300 closed 0.16% lower to 3,981.03.

Investors assessed November inflation numbers from Japan's capital of Tokyo, which saw its headline inflation rate come in at 3%, up from 2.6% in October. Core inflation, which excludes costs of fresh food, rose to 2.4% missing Reuters' expectations of a 2.5% rise. Tokyo's inflation numbers are widely considered to be a leading indicator of nationwide trends.

Following the data, the Japanese yen strengthened and the 10-year government bond yield rose, indicating that traders expect the Bank of Japan to continue tightening its monetary policy.

Separately, Japan's cabinet approved a historic budget of $732 billion for the fiscal year beginning in April, while restricting new bond issuance to its lowest level in 17 years, Reuters reported. The approved budget is 2.6% larger than the current year's budget.

Japan's jobless rate for the month of November came in at 2.5%, in line with Reuters' estimates and unchanged from October.

The Nikkei 225 rose 1.8% to close at 40,281.16, while the Topix added 1.26% to 2,801.68.

Shares of Japanese automaker Nissan fell more than 9%. Nissan and Honda started official talks to merge at the start of the week, which could create the world's third-largest carmaker by sales. Former Nissan CEO Carlos Ghosn has warned that Nissan would become the victim of severe cost-cutting "carnage" if it merges with Honda.

South Korea's Kospi slid 1.02% while the Kosdaq traded 1.43% lower to close at 2,404.77 and 665.97 respectively, as the country's political opposition is set to vote on a motion seeking to impeach the acting president.

Australia's S&P/ASX 200 rose 0.5% to close at 8,261.8 as trading resumed after Christmas and Boxing Day holidays.

Overnight in the U.S., the Dow Jones Industrial Average erased earlier losses and squeezed out a small gain in thin trading Thursday after the market's strong back-to-back gains at the start of the holiday week.

The blue-chip Dow closed the day 28.77 points, or 0.07%, higher to 43,325.80 after losing about 182 points earlier in the session. The S&P 500 dipped 2.45 points, or 0.04%, to 6,037.59. The Nasdaq Composite also ended the day lower, falling less than 0.1% to 20,020.36. 

—CNBC's Yun Li contributed to this report.