Asian stocks stumbled on Friday, after stocks on Wall Street fell for a second straight session on renewed concerns a U.S. economic recovery was losing momentum.
Japan's Nikkei Average pared losses to close lower, as chip-related stocks fell but banks gained on short-covering.
Advantest and other tech shares were hit after disappointing U.S. data fed concerns about the economic recovery and tech shares fell on a brokerage downgrade.
Oil-related stocks underperformed, with top oil and gas explorer Inpex down 3 percent after a brokerage downgrade and oil fell more than 2 percent in the previous session.
Sony shed 3.2 percent after it announced a new business strategy in which it pushed back an elusive target of an operating profit margin of 5 percent to March 2013, though it also said it aimed to make its LCD TV and game operations profitable next year.
JFE, the world's sixth-largest steelmaker, fell 3.3 percent to 2,790 yen as its tie-up with India's No. 3 steelmaker, JSW Steel, was overshadowed by the market's overall weakness.
Mizuho Financial Group, Japan's second-biggest bank, rose 1.9 percent as banks stocks rose on short-covering after recent losses.
Riberesute rallied 6.8 percent after the condominium developer raised its annual dividend forecast. Mitsubishi Chemical jumped 6 percent following a brokerage upgrade.
The Nikkei lost 51.7 points to 9,497.68, while the broader Topix edged up 0.12 percent to 838.71.
Seoul shares emerged from losses to close flat, supported by tech heavyweight LG Electronics' 2.86 percent rise.
The Korea Composite Stock Price Index (KOSPI) edged up in late trade to end at 1,620.60 points.
Defensives such as KT&G, South Korea's tobacco monopoly, rose 0.3 percent. Snack maker Lotte Confectionery gained 1 percent.
Korea Exchange Bank finished flat after rising as much as 1.4 percent. Its shares climbed earlier on a local media report that state-owned Korea Development Bank will 'aggressively" consider buying the country's No. 6 lender.
Australian shares dropped 1.3 percent to a near two-week closing low, as concerns the U.S. economic recovery was losing momentum hurt companies with large offshore earnings.
Westfield, the world's biggest shopping mall owner by market value, lost 2.7 percent. Building products maker James Hardie, which earns about two-thirds of its profit offshore, shed 1.9 percent.
Miner Rio Tinto slipped 1.9 after its Cloud Peak unit's share offer was priced below expectations. Cloud Peak sold shares for $15, raising about $459 million, against its expectations of between $16 and $18.
Dealers also said market speculation that economic data out of China would start pointing to a slowing in demand also weighed on resources stocks.
The benchmark S&P/ASX 200 index fell 63.4 points to 4,685.8, after nudging up 0.2 percent on Thursday.
Insurance Australia Group slumped 6.9 percent to A$3.92 as speculation dimmed that former suitor QBE Insuance Group would launch a bid. IAG had jumped more than 5 percent on Thursday. A QBE executive poured cold water on the rumours in an interview with CNBC television.
ANZ shares fell 2.3 percent to A$21.75. The bank was eyeing the Australian and New Zealand assets of insurance group AXA Asia Pacific Holdings, according to a report in Melbourne's Herald-Sun newspaper.
AXA Asia Pacific shares were down 2.2 percent after French insurer AXA said on Thursday that there was no change for now to its offer made with partner AMP, despite speculation the bid may be raised.
Baraka Petroleum was actively traded, with its shares surging 33 percent to A$0.008 after the oil and gas explorer said on Thursday it had received an encouraging report on prospects in the Georgina Basin in the Northern Territory.
Taiwan stocks tracked Wall Street lower, with big tech names including TSMC under pressure amid caution about the tech sector's recovery.
The key Taiex share index shed 0.99 percent to 7,682.97 points to a one-week closing low.
TSMC, which sells the bulk of its chips to the U.S., dropped 1.9 percent.
PC suppliers to Dell slipped after the U.S. PC maker posted falling quarter earnings on lower-than-expected sales. Quanta Computer, shed 0.9 percent while Compal Electronics lost 1.2 percent.
The Hong Kong market pared losses after declining 1 percent, weighed down by developers and Chinese banks.
The Hang Seng index was down 0.8 percent at 22,455.8 points.
Henderson Land shed 1.1 percent and Sun Hung Kai Properties fell 1.6 percent on profit taking following Thursday's gains.
Investors also took profit in China Mobile after shares of the world's biggest mobile carrier by subscriber gained yesterday on news its business had recovered to pre-crisis levels.
Aluminum Corp of China or Chalco declined 2 percent as higher power rates in China are expected to raise production costs for aluminum smelters.
Lenders ICBC slid 1.4 percent and Bank of Communications fell 1.1 percent. China may adjust banks' reserve requirement ratios next year as the economy improves.
China's key Shanghai Composite ended 0.4 percent lower at 3,308.3 points.
Singapore's STI edged up 0.1 percent, led by banks.
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