Investors were also digesting data overnight that confirmed the U.S. economy -- a major export market -- had contracted in the third quarter.
Tokyo's Nikkei 225 index sank 5 percent to 8,576.98 despite the Bank of Japan's decision to lower its key rate from 0.5 percent to 0.3 percent. Analysts said some investors viewed the measure as half-hearted and wanted a full quarter-point cut.
South Korea's market extended the previous session's 12 percent rally with the Korea Composite Stock Price Index up 2.8 percent at 1,113.29. Australia's key index climbed out of negative territory to close 0.4 percent higher.
"Clients are a little more willing to re-enter the markets as the sense of panic has subsided a bit and valuations have been hammered to ridiculous levels," said Andrew Yates, vice president of foreign institutional sales at Asia Plus Securities in Bangkok.
"Obviously further volatility is likely but funds are picking up stocks at cheap levels for end of month rebalancing of portfolios," he said.
Hong Kong's Hang Seng was down 1.5 percent at 14116.75 after vaulting 12.8 percent Thursday but smaller Asian markets such as the Philippines, Taiwan and Thailand posted gains of 3 percent or more while Jakarta's main index surged 7.1 percent.
In India, the benchmark Sensex index surged 7.3 percent to 9,693.43 as traders caught up with Thursday's rally in Asian markets, when investors cheered a U.S. Federal Reserve rate cut and further central bank steps to boost dollar liquidity in emerging markets.
Japanese stocks were modestly lower for much of the day after jumping nearly 10 percent Thursday on expectations of a rate cut by the central bank.
But when the Bank of Japan announced the cut -- first since March 2001 -- the market fell sharply. With interest rates in Japan already the lowest in the developed world, many analysts doubt looser monetary policy will do much to stimulate the world's second largest economy.
The Bank of Japan's policy board were split 4-4, so Gov. Masaaki Shirakawa, who has the final say in the event of a tie, voted in favor of the cut.
The bank warned that "adjustments in the world economy stemming from financial crises in the United States and Europe have further increased in severity."
Honda Motor Co. fell 13 percent to 2523 yen, Mitsubishi UFJ Finance was down 5.4 percent at 598 yen and Sony Corp. was down 2.2 percent at 2280 yen.
U.S. data overnight confirmed the world's largest economy contracted in the July-September quarter by an annual pace of 0.3 percent, marking the worst showing since it contracted at a 1.4 percent pace in the third quarter of 2001.
"The U.S. economy obviously contracted a lot more than the data says and it is likely to be revised lower. There are clear signs the contraction accelerated from September onward so the fourth quarter will also be weak," said Yates.
The Dow Jones industrial average rose 189.73, or 2.11 percent, to 9,180.69. The S&P 500 index rose 24.00, or 2.58 percent, to 954.09.
U.S. stock index futures were lower, suggesting Wall Street would pull back Friday.
Confirmation the American economy is on the ropes sent oil below $65 a barrel in Asian trade with light, sweet crude for December delivery down $1.71 to $64.25 a barrel in electronic trading on the New York Mercantile Exchange by midday Friday in Singapore.