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 was 1.62 percent lower by the break, Hong Kong shed 1.17 percent, Sydney fell 0.97 percent and Seoul eased 0.82 percent while Shanghai was flat.
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.
In 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.