Shares in Asia fell on Friday, after inaction by the European Central Bank disappointed investors hoping for more easing measures.

Japan's Nikkei Stock Average fell 0.9% even as the yen was nearly unchanged against the dollar after gaining in early trade. Elsewhere, Australia's S&P/ASX 200 fell 0.3%, South Korea's Kospi traded flat and Hong Kong's Hang Seng Index was down 0.5%. China's Shanghai Composite was also down 0.4%.

"Markets had built up some positive expectations from [the Bank of Japan] and ECB," said Khiem Do, head of Asian Multi Asset at Baring Asset Management. Market disappointment over the ECB pause reflected in the fall of the Nikkei, he said.

However, Asian markets remain attractive to Western investors, helping limit the stock declines on Friday, he said. "Investors realize that the Brexit event has passed and global investors are looking for alternatives to the U.K. and Europe."

On Thursday, the ECB stopped short of pledging fresh stimulus for the eurozone economy, leaving interest rates on hold in its first policy meeting since the Brexit vote.

ECB Gov. Mario Draghi said it was too early to determine the economic fallout of the U.K. referendum, stressing that financial markets had shown "encouraging resilience."

Closer to home, the dollar-yen pair broke below the key 106.50 level, consolidating on the downside after Bank of Japan Gov. Haruhiko Kuroda's remarks that there was no need for and no possibility of "helicopter money," or ultra-aggressive easing measures.

Those comments were aired by the British Broadcasting Corp. this week but the interview itself was taped in mid-June.

The Nikkei opened Friday down 1.2%, but recouped some losses after Japan's Nikkei Asian Review reported that the government's stimulus package could reach 30 trillion yen ($283.5 billion), with other off-budget measures, according to unnamed officials.

Shares in McDonald's Holdings Company Japan Ltd. surged 8.2% after "Poké mon Go" launched in Japan. McDonald's in Japan is tying up with the popular smartphone game. Nintendo Co., which has a major stake in the Poké mon franchise, was up 4.4%.

In China, the benchmark Shanghai Composite Index fell even as the yuan was pegged 0.3% higher against the U.S. dollar. The magnitude of the yuan's strengthening was the biggest in three weeks.

Among the region's other currencies, the Malaysian ringgit fell against the dollar for a second straight day, and was recently down 0.6%, while other currencies held steady.

The ringgit's depreciation comes on the heels of the U.S. Department of Justice and authorities in Singapore seizing assets related to alleged money laundering by parties involved with 1MDB, Malaysia's state investment firm.

Kosaku Narioka, Ewen Chew and Yifan Xie contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

 

(END) Dow Jones Newswires

July 22, 2016 00:45 ET (04:45 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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