By Chao Deng 

Markets in Asia fell Friday, as a strong case by the Federal Reserve's chairwoman for raising interest rates before year-end added to investors' concerns about slower global growth.

Japan's Nikkei Stock Average and Australia's S&P ASX 200 both gave up earlier gains to trade down 0.1% and 0.6%, respectively. South Korea's Kospi was off 0.7%.

The Shanghai Composite Index and Hong Kong's Hang Seng Index were both roughly flat.

"There was a strong positive reaction to Janet Yellen's comments initially...but then markets had second thoughts," said Shane Oliver, head of investment strategy at AMP Capital. At the end of the day, "she's still talking about hiking rates."

Years of low interest rates since the global financial crisis fueled stock rallies in the U.S. and elsewhere.

In a speech Thursday at the University of Massachusetts in Amherst, Janet Yellen laid out her most detailed argument yet for the central bank to begin raising short-term interest rates in the coming months, saying that inflation pressures will build gradually over the next few years. The prospect of higher rates threatens to draw capital to the U.S. from emerging markets as investors search for yield.

Some investors and analysts interpreted the Fed's decision last week to keep near-zero rates unchanged as a signal it believed global economies weren't yet strong enough to withstand a rate increase. The uncertainty about the timing of a rate increase continues to cause swings in global markets.

"We're still seeing these ongoing outsized reactions to whatever the Fed says," added Mr. Oliver.

Stocks from Hong Kong to Australia are headed for losses this week, after weak Chinese manufacturing data renewed concerns about the ripple effects of its slowing economy. Of major markets, only the Shanghai Composite Index is set to rebound by 1.4% this week. Earlier this month, worries about China's devaluation of the yuan in August abated and volatility in Chinese domestic shares subsided.

In Japan, government data showed that consumer prices fell for the first time in over two years in August, the latest setback for Prime Minister Shinzo Abe's campaign against deflation. The country's core consumer-price index, which excludes fresh food, fell 0.1% from a year earlier, could spur the central bank to more action in pursuit of its 2% inflation goal.

Currencies in the region mostly fell on the back of a stronger dollar on Friday.

The Japanese yen was as weak as Yen120.37 against the U.S. dollar earlier in the day, which initially helped boost the Nikkei and the country's exporters. The currency was last flat at Yen120.11 against the U.S. dollar compared with its close in Asia on Thursday.

The Malaysian ringgit hit a fresh 17-year low of 4.39 against the U.S. dollar, while the Indonesian rupiah was at a new 17-year low of 14,700 per U.S. dollar.

The New Taiwan dollar strengthened slightly after hitting a six-year low Thursday, when country's central bank lower interest rates for the first time since 2009. The New Taiwan dollar last traded at 32.97 per U.S. dollar.

Gold prices were last down 0.4% at $1,149.80 a troy ounce. Still, gold prices have rallied to their highest level in a month recently as losses in U.S. stocks and weaker economic data pushed some investors to buy the metal as a haven.

Brent crude oil was flat at $48.16 in Asia trade.

Markets in India and the Philippines are closed for holidays.

Markets in Australia, Hong Kong, Taiwan and South Korea are closed next Monday.

Write to Chao Deng at Chao.Deng@wsj.com

(END) Dow Jones Newswires

September 24, 2015 23:43 ET (03:43 GMT)