Most Asian markets fell on Friday on a mixture of regional factors, from expectations China may raise interest rates soon to signs of growing pessimism among Japanese corporate executives.
Lingering worries about fallout from the subprime mortgage crisis in the US, a vital export market, continued to weigh on sentiment.
In Tokyo, the benchmark Nikkei 225 stock index fell 22.01 points, or 0.14 percent, to 15,514.51 points, bringing its three-day loss to 3.3 percent.
Investors were disappointed by the Bank of Japan's quarter tankan survey that showed confidence at major Japanese companies has fallen to its lowest in more than two years amid worries about the strong yen and higher oil prices.
The survey's most-watched number, the sentiment index for large manufacturers, fell from 23 last quarter to 19, the lowest since September 2005.
Real estate companies like Mitsui Fudosan Co were among the decliners.
Banking stocks also fell after Citigroup Inc said overnight it plans to assume control of the seven "structured investment vehicles" the bank advises to help them repay their debts. Mizuho Financial Group sank 4.9 percent and Mitsubishi UFJ Financial Group fell 4.78 percent.
Meanwhile, the dollar's recent recovery against the yen helped lift exporters like Matsushita Electric Industrial Co and Nintendo.
With no major market-moving news expected in the week to come, traders expect the Nikkei to be volatile.
"That's what is likely to happen while the market lacks domestic catalysts," said Hitoshi Yamamoto CEO of Fortis Asset Management Japan.
In Hong Kong, shares fell on continued concern about the US economy and expectations China might raise interest rates this weekend to curb inflation.
The blue-chip Hang Seng Index fell 180.81 points, or 0.65 percent, to 27,563.64. It's dropped 6.8 percent since it closed at 29,530.32 last Thursday.
Traders said the correction may not be over yet and selling pressure will remain in the near term on continuing concerns over the weakening US economy.
"Trading has become lethargic with no positive leads now," said Castor Pang, a strategist at Sun Hung Kai Research.
Banks were under pressure on Friday on uncertainty over the impact of the sub-prime crisis. Industrial and Commercial Bank of China fell 3.4 while China Construction Bank dropped 2.4 percent.
Many Chinese companies fell on expectations China's central bank may raise interest rates over the weekend to curb inflation.
But Chinese stocks rose, led by strong gains in liquor makers who are expected to benefit from higher food prices.
A rebound in property developers also helped buoy the market.
The benchmark Shanghai Composite Index gained 1 percent, or 49.86 points, to 5,007.91.
TAIPEI
Taiwan's main stock index fell to a four-month low on continued concerns over rising labor costs in China. The Weighted Price Index of the Taiwan Stock Exchange shed 0.9 percent to finish at 8,118.1.
JAKARTA
Indonesian shares fell amid the general risk aversion clouding regional markets. The main stock index dropped 0.6 percent to finish at 2,740.1.
BANGKOK
Thailand's main stock index rose 0.4 percent to 836.40.
KUALA LUMPUR
Malaysian shares declined in profit-taking ahead of the weekend, with overall trading activity sluggish. The Kuala Lumpur Composite Index fell 0.5 percent to 1,403.4.
MANILA
Philippine shares tumbled, hurt by foreign selling as stock markets retreated around the region. The Philippine Stock Exchange Index fell 2.4 percent to 3,538.7.
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