Asian shares tumbled on Monday after the US Federal Reserve's decision to keep interest rates at record lows raised fresh concerns about growth globally, particularly in China.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 2 per cent, with Australia down 2.4 per cent and South Korea off 1.7 per cent. Japan was closed for a long holiday.

Both the Shanghai Composite index and the CSI300 were little changed.

Investors will be focusing on flash manufacturing activity readings from China and the eurozone on Wednesday.

A Reuters poll showed economists expect the flash September China factory PMI headline reading to edge up to 47.5 from 47.1 in August.

But it likely remained near 6/1-2-year lows, pointing to a seventh straight contraction in activity on a monthly basis.

"It looks like a continuation of the growth worries that have hampered markets for the last few months now," said Shane Oliver, head of investment strategy at AMP Capital in Sydney.

"European and US shares had sharp falls, after initially benign reactions to the Fed, and this is now flowing through to Asian markets today," he said.

US shares dropped more than 1.3 per cent on Friday, after Fed Chair Janet Yellen said on Thursday that the global economic outlook appeared less certain.

US and European debt yields also tumbled, with the policy-sensitive two-year yield falling to 0.678 after hitting a four-and-a-half year high of 0.819 per cent earlier in the week.

The 10-year German Bund yield fell 12 basis points to 66 basis points, its biggest one-day drop since early July.

"The monetary-policy-watcher world has now turned decidedly bearish" after the Fed meeting, Evan Lucas, market strategist at trading services provider IG in Melbourne, wrote in a note.

"If emerging market risk, coupled with low-growth European environment is affecting Fed decision making, sentiment uncertainty will amplify," he said.

The US dollar, which retreated after the Fed decision, rose 0.3 per cent to 95.135 against a basket of six currencies but slipped 0.2 per cent to 119.79 yen on Monday.

The euro was little changed at $1.1309.

Oil prices were slightly higher as US drilling slowed, after slumping on Friday on the selloff in US stocks.

US crude futures were up 0.4 per cent at $44.85. Brent futures also rose 0.3 per cent to $47.63. – Reuters