US and European stock markets mostly retreated Friday following a record-filled rally sparked by a jumbo US interest rate cut this week.

Asian shares extended their rally on Friday, bathing in the afterglow of an outsized interest rate cut in the United States, while the yen was jittery ahead of a monetary policy decision in Japan as traders look for clues about future tightening.

Asian markets forged higher on Thursday after the Federal Reserve kicked off its efforts to prevent a recession in the U.S. with a bigger-than-usual cut to interest rates. In Tokyo, the Nikkei 225 index jumped 2.5% to 37,284.43. Hong Kong's Hang Seng gained 1% to 17,840.93.

By Stella Qiu SYDNEY (Reuters) -Asian shares extended their rally on Friday, bathing in the afterglow of an outsized interest rate cut in the United States, while the yen edged higher as the Bank of Japan held rates steady and stayed upbeat on the economy.

Asian stocks have surged, with Japan’s Nikkei 225 index leading gains after Wall Street romped to records following the Federal Reserve’s big cut to interest rates

Wall Street closed flat on Friday, hovering near the previous session's record-high close for the Dow and S&P 500, while the dollar firmed as investors digested the Federal Reserve's 50-basis-point cut midweek that started a rate reducing cycle.

Wall Street pointed lower Friday as a rally driven by the Federal Reserve’s big cut to interest rates faded and markets' focus turned to earnings and other corporate news. Futures for the S&P 500 shed 0.