The Nikkei 225 pared losses and closed flat, up 2 points or 0.01 percent to 19,940 as investors remained cautious over Japan's fragile economy.
Reuters reported that capital flows data showed foreign investors were net sellers of Japanese stocks last week, with a net 54.6 billion yen ($443 million) in shares sold.
On Wednesday, the Bank of Japan's deputy governor Kikuo Iwata told business leaders in Okayama the BOJ was prepared to ease monetary policy again if tougher conditions in emerging markets stymied the uptrend in Japanese inflation, but he said that the central bank could keep policy unchanged at present because the risks from a further slowdown in emerging economies worsening was low in the near future.
"If the manifestation of such risk leads to a deterioration of the underlying trend in inflation, the Bank will make adjustments without hesitation," he said.
Shares in Pioneer saw the biggest loss on the index, down 4 percent on fears of stock dilution. The company reportedly announced on Wednesday it will raise 15 billion yen ($121.6 million) by issuing convertible bonds.
Japanese blue chip companies closed mixed with shares in Mitsubishi Electric and Toshiba seeing losses between 0.7 and 1 percent. Market heavyweight Fast Retailing also closed the session down 1.57 percent.
The South Korean market continued its losing run as investor confidence weighed by Wall Street and lower commodities prices. The Kospi index closed 15 points or 0.8 percent lower at 1994.
Revised data from the Bank of Korea showed the economy grew a seasonally adjusted 1.3 percent on-quarter between July and September.
Blue chip and tech shares traded lower. Shares in Samsung Electronics was down 0.77 percent, steel manufacturer Posco was down 0.86 percent, while Hyundai Motor pared losses and closed 0.66 percent higher.
The Korean won depreciated against the dollar, fetching 1164 won.