HONG KONG - Asian shares fell Friday after a global rally powered by the US Federal Reserve's decision to maintain its vast stimulus programme, with a surprise interest rate hike dragging down Indian stocks.
Tokyo slipped 0.16 per cent, or 23.76 points, to 14,742.42 as the dollar held firm on better-than-expected US economic data. Sydney fell 0.36 per cent, or 18.8 points, to 5,276.7.
Mumbai plunged 2.45 per cent in afternoon trade after India's new central bank governor, Raghuram Rajan, surprised markets with a bold decision to hike interest rates on fears of rising inflation.
Rajan increased the benchmark interest lending rate to 7.50 per cent from 7.25 at his first policy review meeting since taking the reins.
He had been widely forecast by economists to keep rates on hold despite annual inflation hitting an unexpected six-month high of 6.1 per cent this week.
Markets in Seoul, Shanghai, Hong Kong and Taiwan were closed for public holidays.
Stock markets across the globe jumped following the Fed's announcement on Wednesday that it would hold off from tapering its $85-billion-a-month bond-buying scheme.
Developing economies such as Indonesia, the Philippines and India breathed a sigh of relief after suffering a heavy sell-off in August as investors bet on the Fed winding down its quantitative easing (QE) policy.
But Asian markets took a breather on Friday as investors pondered the Fed's next move.
"Today looks like being one of those Fridays where markets take stock after a big news week," said Ric Spooner, chief market analyst at CMC Markets.
"We may see some profit-taking by short-term sellers disappointed that yesterday's strong upward momentum was not followed through," he told Dow Jones Newswires.
US stocks closed mixed on Thursday, with the Dow Jones Industrial Average dropping 0.26 per cent to 15,636.55 while the tech-rich Nasdaq Composite Index rose 0.15 per cent to 3,789.38.
The dollar bought 99.31 yen in afternoon Asian trade, slightly down from 99.38 yen in New York but well above the low 98-yen range seen in Tokyo Thursday morning.
The greenback was boosted by official figures on Thursday that showed new claims for US unemployment benefits rose modestly last week but the overall trend showed fewer layoffs.
The euro bought $1.3532 and 134.48 yen compared with $1.3531 and 134.57 yen in US trade.
On oil markets, New York's main contract, West Texas Intermediate (WTI) for October delivery, fell 30 cents to $106.09 a barrel in afternoon trade after sinking $1.68 at the close in New York Thursday.
The European benchmark, Brent North Sea crude for delivery in November, dipped seven cents to $108.69 after declining $1.84 in London the day before.
Gold cost $1,356.79 an ounce at 0859 GMT compared with $1,364.54 late Thursday.
In other markets:
-- Manila fell 1.34 per cent, or 87.25 points, to 6,424,45.
Ayala Corp. slipped 0.48 per cent to 616 pesos and its property arm Ayala Land lost 3.23 per cent to 28.50 pesos.