Singapore shares closed at a record for a second day, as property stocks were higher.

Elsewhere around the region, shares indexes in India and Indonesia hit highs, while China shares listed in Hong Kong rallied on expectations the yuan will accelerate its appreciation against the U.S. dollar ahead of next week's visit to China by U.S. Treasury Secretary Henry Paulson.

China shares listed in Shanghai closed at a fresh five-year high.

The Japanese yen rallied to a 17-week high and the South Korean won hit a nine-year high after BoJ policy-board member Atsushi Mizuno said the central bank may raise interest rates despite weaker economic indicators.

"Some recent economic indicators have been unfavorable. But it's not like we can't raise our policy rate unless all economic indicators prove to be strong," Mizuno was quoted by Dow Jones Newswires as saying in a speech.

Mizuno is widely regarded as one of the most hawkish members of the BoJ's nine-member policy board.

In currency trading, the U.S. dollar fell to 114.73 yen, from its level of 115.33 yen in late New York trading. The won closed at 924.3 to the U.S. dollar, up 3.3 won from its close in the previous session in Seoul.

"The comments out of the BoJ affected market thinking in what is a dollar-bearish environment," said Shahab Jalinoos, ABN Amro's head of foreign-exchange strategy in Singapore.

"The BoJ has not been as aggressive in trying to defend the dollar as they have been in recent days, so you've seen a lower [U.S. dollar] as a result," he added

Japan's Nikkei 225 Index ended 0.2% lower at 16,265.76, erasing gains that had seen the benchmark share index in positive territory most of the day. The broader Topix index fell 0.6% to 1598.89.

South Korea's Kospi fell 0.4% to 1,420.59.

Singapore's Straits Times Index rose sharply late in the day, finishing 51.3 points, or 1.8%, higher at 2,901.99.

Hong Kong's Hang Seng Index rose 1.3% to 18,944.19. The broader China Enterprises Index, Hong Kong's benchmark for China shares, rose 2.1% to 8,758.17.

"Speculators are still very keen to jump into the market even at this level, liquidity remains very strong and investors are just looking for concepts or ideas to jump into the market," said Alex Wong, a fund manager with Shenyin Asset Management in Hong Kong.

Elsewhere in the region, Australia's S&P ASX/200 traded flat and Taiwan's Weighted Price Index fell 0.5%. Malaysia's KLSE Composite gained 1.1%. New Zealand's NZX-50 index ended 0.4% higher and Shanghai's Composite Index rose 0.5%.

India's benchmark 30-issue Sensex rose above the 14,000-point level for the first time before scaling back to trade 0.5% higher at 13,937.65.

Shares of Toyota , Japan's largest automaker, fell 0.7%. South Korean consumer-electronics giant Samsung Electronics erased gains to end lower 0.5%.

Also lower, South Korean industrial giant Hyundai Motor fell 2%.

South Korea's dominant tobacco group, KT&G Corp.,. fell as much as 4.4% after U.S. billionaire Carl Icahn sold most of his stake in company at a discount before the start of trading Tuesday.

In Tokyo, shares of Mitsubishi UFJ, Japan's largest bank by assets, fell 1.4%.

Among gaining Japanese shares, Kobe Steel Ltd. rose 4.2% after broker Mizuho Securities raised its price target citing strong earnings growth in its non ferrous metals division.

Fast Retailing jumped 5.7% after the operator of the Uniqlo retail chain reported store sales increased 8% in November, reversing a sales decline of 4.5% in October. Shipping line Mitsui Osk jumped 3.1% after Nikko Citigroup lifted its price target on the company, citing a rebound in container-shipping rates.

In Hong Kong, China Telecom surged 16% while fellow fixed-line operator China Netcom rose 8.5%.

Netcom Chief Executive Zuo Xunsheng said the company and its peer China Telecom could receive third-generation-cellular licenses as early as the end of the month.

Shares of mainland banks were higher on renewed optimism about China's growth prospects. China Construction Bank jumped 3.2% while fellow state-owned lender Bank of China ended 1.1% higher.

In the energy sector, PetroChina rose 0.8%, while Woodside Petroleum Ltd. rose 0.1% and Japan's Inpex Holdings tumbled 3.4%. Asia's largest refiner, Sinopec, surged 4.8%.

In Sydney trading, shares of building-materials maker Rinker Group Ltd. fell 1.3% on dimming prospects for a $12 billion takeover bid by Mexico's Cemex.