A rally in Asian shares sputtered on Thursday, pressured by a pullback in Chinese stocks and higher U.S. yields amid fears that global central banks would keep raising interest rates to combat sticky inflation.

Oil prices kept to a tight range on Thursday as traders weighed the prospect of a strong recovery in Chinese demand against the possibility that rising interest rates and elevated inflation will crimp economic activity this year. 

The dollar nursed losses on Thursday as optimism about China's reopening was supported by encouraging data and underpinned Asian currencies, while sticky inflation had the euro eying its best week in a month and a half.

Malaysia's economic growth is likely to be moderate in 2023 with the Gross Domestic Product (GDP) expected to grow 4.1 per cent after an exceptional 8.7 per cent expansion in 2022, said Moody's Analytics.

Inflation in two of the euro zone's biggest economies rose unexpectedly this month, data showed on Tuesday, pushing up European Central Bank rate hike expectations and challenging the narrative that a rapid easing in price growth is now underway.

Japan's factory activity shrank in February at the fastest pace in over two years, a private survey showed, highlighting companies' struggles amid a global economic slowdown, raw material inflation and policymakers' calls for higher wages.