Europe's stock markets were tipped to notch up modest opening gains, with financial bookmaker CMC Markets predicting Britain's FTSE 100, Germany's Dax and France's CAC-40 will rise between 0.2-0.4 percent.
As the cloud of a U.S. recession still hung over markets, demand for safe-haven government bonds remained strong, pushing the two-year Japanese bond yield below to the Bank of Japan's overnight rate target on mounting expectations for a rate cut later in the year.
Bonds were also underpinned by a drop in S&P 500 futures pointing to another weak session on Wall Street.
The dollar reversed an earlier rally to fall one yen from the day's high.
Some said the Fed's decision -- a week before a scheduled rate meeting -- smelled of panic even though it halted the global market meltdown that has knocked more than 12 percent off MSCI's All Country World index since the start of the year.
"I don't think that's the fix-all for markets. It's a reinstatement of the fact that yes, there's a slowdown," said Bhaskar Laxminarayan, chief investment officer, Asia for Swiss Bank Pictet & Cie in Singapore.
"That means lower demand for things. That means lower sales or lower margins, and therefore the way we value companies has to be looked at differently.".
Concerns global economic growth was hitting a wall and financial institutions had more subprime-related write-downs to reveal have haunted markets since the start of the year.
In an effort to shore up confidence, the U.S. central bank slashed its benchmark rate by three-quarters of a percentage point to 3.5 percent yesterday.
Clement Ho, chief investment officer with Hang Seng Investment Management in Hong Kong, said a further cut of 50 basis points would be needed when the Fed meets later this month to boost confidence, and anything less could trigger further stock market falls.