Japan's Nikkei rallied 0.5 percent on Monday as investors turned buyers after a broad sell-off last week, though concerns lingered over the earnings outlook for Japanese corporates.

Buyers were encouraged by Chinese inflation data that signalled Beijing had room to ease policy further to shore up growth in Japan's main export market.

The index's advance was held back, however, by Softbank Corp's 5.3 percent fall to a 5-month closing low due to fears that the mobile phone provider would pay too much to buy out Sprint Nextel Corp, after it was reported that the deal could be worth $20 billion.

Softbank's stock hit an 8-month intraday low as sources said the Japanese mobile carrier would provide $8 billion of new capital and acquire an additional $12 billion worth of shares from Sprint shareholders, funded by a 1.65 trillion yen ($21.1 billion) loan from four banks.