Asian markets decline

Asian stocks fell on Friday in a broad wave of profit-taking, giving up much of this week's gains, while a ratings cut gave investors an excuse to reduce their Japanese share holdings.

For the week, the MSCI index of Asian stocks outside Japan is set to eke out meager gains, thanks to the U.S. Federal Reserve reiterating its dovish policy stance this week, indicating flows toward emerging markets will remain strong for now.

Still, Asian shares have underperformed the MSCI world index which has risen by 2.5% since the beginning of the year on a combination of factors such as frothy valuations and a steady drip of positive data out of Europe and the United States.

The Nikkei average, one of the best performing markets this year, ended down 1.3% on worries of higher borrowing costs for financial companies, after Standard & Poor's cut Japan's credit rating by a notch. Banking and technology shares weighed.

Corporate earnings were robust, with Samsung the world's top memory chipmaker, set to show improved results, sending its shares to a record.

Hong Kong's Heng Seng retreated 0.7% as energy and metal shares dipped. China's Shanghai Composite ended flat at 2,882 and Seoul Composite was down 0.2%. Taiwan Weighted was up 0.4%, Straits Times, Singapore's benchmark index rose 0.3%. Citi strategists recommend staying underweight in Indian and Southeast Asian shares and overweight in North Asia stocks.

Last week, Asian stocks fell by more than 6%, their biggest percentage fall in nearly two months, as investors shied away from markets such as Indonesia and India, on concern inflation may be getting out of hand.

Dow Jones Industrial Average futures were also trading lower by 29 points indicating weak opening in the US.

European markets also opened lower taking cues from sell-off across Asia. The FTSE 100 was down 0.7%, the CAC 40 fell 0.2% and the DAX was trading flat. Miners weighed led by profit booking in commodity stocks after prices fell.