Asian stocks ended mixed on Friday as investors shunned risk on concerns about the pace of policy tightening in the region and growing tensions in Egypt.
A broad sell-off in Asia since the start of 2011 on inflationary worries has shown no signs of abating, as expectations of more monetary tightening have encouraged investors to shift funds from emerging to developed markets.
Analysts said the selling in emerging markets could have some more room to run, especially in countries where stocks are ripe for a pullback after last year's stellar gains and the near term interest rate outlook is unclear.
MSCI's index of Asia Pacific shares-ex-Japan is set to fall by more than 4 percent this week, its worst performance since May 2010.
Seoul shares ended lower on Friday despite a central bank decision to keep interest rates on hold, as foreign selling continued on persistent worries about inflation and monetary tightening.
The Korea Composite Stock Price Index (KOSPI) closed down 1.56 percent .
Insurers lost ground on profit-taking and disappointment about the rate freeze. Insurers usually benefit from interest rate hikes as they have substantial holdings in interest-bearing assets.
Hyundai Marine & Fire Insurance slumped nearly 3 percent, while LIG Insurance dropped 2.4 percent.
Bank shares were mixed, with Hana Financial Group posting the sharpest declines after it announced a new share issue plan.
Hana said on Thursday it would raise 1.4 trillion won through a new share issue to fund its takeover of Korea Exchange Bank.
Taiwan stocks fell for a fourth session on Friday, leading declines in Asian markets amid an aversion to risk and profit taking by foreign investors.
The main Taiex fell 2.6 percent, in its biggest one-day percentage fall since May. Financial stocks were among the biggest losers.
Australia's benchmark S&P/ASX 200 index snapped a seven-day winning streak as investors took profits from banking and resource shares.
Shares in Rio Tinto , whose smaller than expected $5 billion share buyback disappointed some investors, closed 1.6 percent weaker, while BHP Billiton lost 0.8 percent.
Shares in Newcrest Mining fell 1.2 percent after Australia's top gold miner almost doubled underlying first-half profits due to higher gold production and appointed a new chief executive.
Shares in Telstra topped the most actives list and and closed up 1 percent, a two-and-a-half month high, as investors welcomed a big jump in customer numbers reported on Thursday.
Singapore stocks lost 0.8 percent at the close. But Keppel Land was a bright spot, rising as much as 2.4 percent, on bargain hunting. The stock was among the hardest hit by China's recent rate hike.
China bucked the downtrend. The main Shanghai Composite index closed up 0.3 percent at a one-month high on Friday, supported on a rally in the property sector after an official newspaper reported that country's house prices continued to rise in January.
However there are concerns those gains could be capped ahead of economic data next week that could prompt further tightening.
In Hong Kong, the Hang Seng index finished up 0.5 percent.
Over in Indonesia, shares of the country's flagship air carrier Garuda plunged by as much as 23 percent on its debut as investors shunned the stock's high valuation. The Jakarta Composite ended 0.5 percent higher.
The FTSE CNBC 100 Index fell 0.8 percent.
Japanese markets were closed for National Foundation Day.