Asian stock markets rallied to a four-month high Friday after the U.S. Federal Reserve launched another large scale of asset purchase program overnight to stimulate the world's largest economy.

Japanese benchmark Nikkei gained 1.83 percent or 164.24 points to 9,159.39, Hong Kong's Hang Seng surged 2.90 percent or 582.15 points to 20,629.78 and South Korean KOSPI Composite rallied 2.92 percent or 56.89 points to 2,007.58 while India's BSE Sensex surged 2.25 percent and Chinese Shanghai Composite advanced 0.64 percent.

In a statement at the conclusion of a two-day policy meeting Thursday, the Federal Open market Committee (FOMC) announced that it would purchase $40 billion mortgage-backed securities per month for an open ended period until the labor market improves substantially. This combined with the continuation of "Operation Twist" will bring the total increase in long-term securities purchases to about $85 billion per month till December 2012, up from the $45 billion of long-term bonds buying under the current maturity extension program.

"Emerging market sentiment improved sharply on FOMC decision that went further in policy easing than had been anticipated. The new QE program could contribute a modest narrowing of spreads on mortgage product, adding some support to the housing recovery and it will be constructive for equity markets, which will help households through a positive wealth effect," said a note from Credit Agricole

The Fed stated clearly that if the outlook for the labour market did not improve substantially, then the committee would continue its purchases of the mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate until a substantial improvement in the U.S. labour market was seen.

The central bank also extended its conditional commitment to leave its policy rate at near-zero until mid-2015. This has given the signal to markets that the Fed doesn't intend to withdraw its accommodative policy stance any time soon.

"The Fed confirmed the easing speculation the market had. Recent easing measures by central banks to boost economic growth are a short-term relief.... Confidence is still fragile at this point. It doesn't mean they've solved the problem," Benjamin Tam, who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong, told Bloomberg.

Japanese stocks rallied, led by gains from exporter companies' shares. Canon Inc. surged 3.57 percent and Toshiba Corp. advanced 2.36 percent while Sony Corp. gained 3.47 percent.

Hong Kong shares surged to the highest level since early May while weakness in the property sector weighed on Chinese Shanghai. Zhaojin Mining Industry Co Ltd climbed 14.16 percent and Jiangxi Copper Co Ltd. rallied 7.79 percent in Hong Kong while Poly Real Estate Group declined 0.19 percent in Shanghai.

Financials went up across the region. Mitsubishi UFJ Financial Group Inc. surged 3.79 percent and Nomura Holdings Inc. surged 4.18 percent in Tokyo while China Construction Bank Corp gained 2.37 percent and Bank of China surged 3.17 percent in Shanghai.

South Korean shares surged to a five-month high following Fed announcement and after Standard & Poor's upgrade of Korea's credit rating by one notch to A-plus. SK Hynix Inc. surged 5.03 percent and LG Display Co Ltd. gained 4.81 percent while Samsung Electronics Co advanced 2.69 percent.