Hong Kong - Asian markets mostly rose 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 gains were capped after the central bank's chief 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 1.15%, lifted by the weakening yen, Hong Kong gained 0.22%, Sydney added 0.10% and Seoul was 0.60% higher, but Shanghai lost 0.36%.
After a two-day meeting the policy committee of the US central bank said it would replace its "Operation Twist" bond swapping programme with $45bn a month in straight bond buys, on an open-ended basis.
That comes on top of the $40bn 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% and the jobless rate, now at 7.7%, stays above 6.5%.
"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% 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%, 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 ¥83.42 in early Asian trade, from ¥83.24 in New York late on Wednesday, while the euro was at ¥108.95 from ¥108.85. That compares with ¥82.67 and ¥107.48 earlier on Wednesday in Asia.
The euro bought $1.3063 against $1.3075.
Oil was lower in Asia on Thursday, with New York's main contract, light sweet crude for delivery in January, falling 19 cents to $86.58 a barrel and Brent North Sea crude for January delivery shedding 15 cents to $109.35.
Gold was at $1 699.60 at 02:30 GMT compared with $1 713.22 late on Wednesday.