HONG KONG - Asian markets retreated and the euro came back under pressure on Friday after the European Central Bank dashed traders' hopes for strong policy actions to support troubled eurozone economies.
Downbeat earnings reports from two of Japan's biggest electronics firms also weighed on the Nikkei, with Sharp losing more than a quarter of its value in the morning session.
Tokyo fell 1.13 percent, or 98.07 points, to 8,555.11, Seoul shed 1.11, or 20.72 points, to 1,848.68, Sydney closed 1.12 percent, or 48.0 points, lower at 4,221.5 and Hong Kong shed 0.12 percent, or 24.02 points, to close at 19,666.18.
But Shanghai ended 1.02 percent higher, adding 21.62 points to 2,132.80, after the country's securities regulator said it would cut transaction fees on equity trading by 20 percent from September 1.
Markets were deflated by the ECB's decision to hold off any concrete moves to support the euro such as bond buying, which many had hoped for after bank chief Mario Draghi said last week it would do whatever was needed to save the euro.
On Thursday he reiterated that the ECB was ready to step into the bond markets -- but not just yet.
Draghi insisted the onus was on eurozone governments, saying they must carry out promised reforms and turn to the region's bailout funds before the ECB could step in.
In the face of growing pressure, the ECB "may undertake outright open market operations of a size adequate to reach its objective", he said, but added that the details would be worked out "in the coming weeks".
Whatever the circumstances, Draghi said it was "pointless" to bet against the euro. "It stays. It stays. It stays," he insisted.
However investors, who had sent global markets surging over the past week as they factored in some sort of action, were unimpressed and Spanish borrowing costs bounced back above the seven percent danger level.
"The delay in actions may last until the next ECB meeting (September 6)," said Anthony Lam, strategist at Credit Agricole. "In the meantime, a downbeat mood will continue hanging over the market."
The let-down came after the US Federal Reserve had said on Wednesday that it would take a wait-and-see approach before unveiling any stimulus for the world's number one economy.
The news rippled around global markets, with London losing 0.88 percent, Frankfurt 2.20 percent off and Paris 2.68 percent lower, while Madrid shares plunged 5.16 percent and Milan was 4.64 percent off.
On Wall Street the Dow fell 0.71 percent, the Nasdaq lost 0.36 percent and the S&P 500 dropped 0.74 percent.
In foreign exchange trade the euro, which tumbled after the ECB announcement, remained under pressure in Tokyo as investors moved out of riskier assets and into safer bets such as the yen and dollar.
The common unit bought $1.2210 and 95.55 yen in late afternoon trade, compared with $1.2178 and 95.26 yen in New York late Thursday.
It was still well down from the $1.2250 and 96.12 earlier in Asia before the ECB meeting.
The dollar was at at 78.23 yen from 78.22 yen.
In Tokyo Sharp shed 28.08 percent a day after it said losses in the first quarter to June almost trebled from last year and it warned its full year loss would be wider than first thought.
Sony also lost seven percent after reporting its quarterly loss had widened while also cutting its full-year profit forecast.
Eyes will now be on Washington where US employment data for July is due to be released, providing a clearer indication as to the state of the economy.
Oil prices were higher. New York's main contract, light sweet crude for September delivery advanced $1.05 to $88.18 a barrel and Brent North Sea crude for September was 94 cents higher at $106.84.
Gold was at $1,593.22 at 0800 GMT, from $1,602.40 on Thursday.
In other markets:
-- Taipei fell 0.69 percent, or 50.45 points, to 7,217.51.
Hon Hai Precision shed 3.77 percent to Tw$81.6 while TSMC was 0.25 percent lower at Tw$79.8.
-- Manila closed 0.14 percent, or 7.49 points, lower at 5,285.91.
Tanduay Holdings dropped 5.06 percent to 10.88 pesos while Philex Mining, the country's largest mining firm, slipped 7.59 percent to 19.96 pesos after Philex saying waste had leaked from one of its mines due to heavy rains, forcing the government to shut it down.
-- Wellington fell 0.45 percent, or 16.11 points, to 3,548.00.
Telecom shed 0.74 percent to NZ$2.68, Chorus was off 0.96 percent at NZ$3.08 and Fletcher Building fell 0.32 percent to NZ$6.17.
© 1994-2012 Agence France-Presse