HONG KONG - Asian stock markets were mixed on Thursday as the US Federal Reserve announced fresh monetary easing and said it would not lift interest rates until unemployment was under control.
However, the head of the central bank Ben Bernanke said the looming fiscal cliff of huge tax hikes and deep spending cuts was already hitting the economy.
The yen continued its slide ahead of the weekend's general election in Japan that is expected to see a victory for the opposition, whose leader has vowed to press for more aggressive measures to kickstart growth.
Tokyo climbed 1.68 per cent, or 161.27, to an eight-month high of 9,742.73 as major exporters gained on the yen's dip, Sydney ended flat, dipping 1.0 point to 4,582.8, and Seoul was up 1.38 per cent or 27.33 points, at 2,002.77.
Hong Kong lost 0.26 per cent, breaking a three-day rally that saw the market hit a 16-month high. The index eased 57.77 points to close at 22,445.58, while Shanghai fell 1.02 per cent, or 21.25 points, to 2,061.48
After a two-day meeting the policy committee of the US central bank said it would replace its "Operation Twist" bond swapping programme with US$45 billion (S$55 billion) a month in straight bond buys, on an open-ended basis.
That comes on top of the US$40 billion a month purchasing announced in September.
The Fed also provided a surprise by saying it would not lift rates as long as the inflation outlook was below 2.5 per cent and the jobless rate, now at 7.7 per cent, stays above 6.5 per cent.
"The Fed's decisions did not really surprise anyone, although its comments about expecting rates to remain very low as long as unemployment remains above 6.5 per cent were somewhat novel," said Hiroichi Nishi, general manager of equities at SMBC Nikko Securities.
"The bottom line is that it will continue its aggressive steps to foster economic growth," he told Dow Jones Newswires.
However, the Fed's announcement was followed by a warning by Bernanke that Washington needed to come to an agreement in their talks on avoiding the fiscal cliff, adding that the lack of action was already causing problems.
"Even though we have not even reached the point of the fiscal cliff potentially kicking in, it's already affecting business investment and hiring decisions by creating uncertainty or creating pessimism," he said at a news conference.
On Wall Street the Dow and S&P 500 ended flat, while the Nasdaq fell 0.28 per cent, with earlier gains from the Fed announcement cut back by Bernanke's comments.
On currency markets the yen remained under pressure as Sunday's poll approaches, with Prime Minister Yoshihiko Noda's Democratic Party of Japan likely to lose to the Liberal Democratic Party, which is headed by Shinzo Abe.
Abe, a former prime minister, has promised to push a more aggressive monetary easing policy to jumpstart the economy.
The dollar was changing hands at 83.47 yen (S$1.20) in afternoon Asian trade, from 83.24 yen in New York late Wednesday, while the euro was at 109.14 yen - near its highest in about nine months - from 108.85 yen. That compares with 82.67 yen and 107.48 yen earlier on Wednesday in Asia.
The euro bought US$1.3078 against US$1.3075.
Oil prices were lower. New York's main contract, light sweet crude for delivery in January fell 19 cents to US$86.58 a barrel in the afternoon and Brent North Sea crude for January delivery shed 17 cents to US$109.33.
Gold was at US$1,698.70 at 0810 GMT compared with US$1,713.22 late Wednesday.
In other markets:
- Taipei rose 0.87 per cent, or 66.9 points, to 7,757.09.
- Chip giant TSMC gained 0.81 per cent to Tw$99.2 (S$4) while smartphone maker HTC was 0.35 per cent higher at Tw$285.0.
- Manila fell 0.55 per cent, or 31.84 points, to 5,787.95.
- Wellington fell 0.51 per cent, or 20.53 points, to 3,974.73.
- Telecom eased 1.6 per cent to NZ$2.16 (S$2.20), Air New Zealand was down 2.9 per cent to NZ$1.34 and Fletcher Building was up 0.12 per cent at NZ$8.29.