Asian stock markets struggled on Friday, after the sell-off on Wall Street overnight which saw the Dow Jones Industrial index fall more than 1 percent.
Japan's Nikkei average ended a touch lower, as the announcement of stricter capital rules led banks to give back some of this week's hefty gains while metal stocks fell as the dollar's strength hit gold prices.
The Bank of Japan said it would not tolerate deflation and promised to keep policy very easy after its policy meeting today.
The BOJ's decision helped the market to come off the day's lows as analysts said the central bank may be setting the scene for a further easing of monetary policy to fight deflation.
Japan's top lender Mitsubishi UFJ Financial Group trimmed losses to 0.43 percentat 462 yen. Sumitomo Mitsui Financial Group, the third-ranked bank, slumped 4.86 percent while No.2 lender Mizuho Financial Group dropped 2.7 percent to 179 yen.
Banks shares had surged this week as fears of imminent large-scale equity financing eased after sources said that global regulators would stick to plans to gradually implement capital
rule changes starting in 2012 but would give banks a transition period to help them adjust to the rules.
But the announcement from the Basel committee of bank regulators was not completely reassuring.
The committee wants the changes to take effect by the end of 2012, but they may be postponed if the global economy is still struggling at the time, the committee's secretary general Stefan Walter told Reuters.
The benchmark Nikkei inched down 0.2 percent or 21.75 points to 10,142.05 after falling to just above the 10,000 mark. The broader Topix shed 0.3 percent to 893.59 points.
Resource-linked shares slid after gold prices fell 3 percent the previous session, pressured by the dollar's strength, while world oil prices fell broadly also as U.S. unemployment claims
rose.
Metal stocks fell as Sumitomo Metal Mining lost 3 percent to 1,363 yen and Dowa Holdings slid 0.9 percent to 499 yen.
Oil and gas field developer Inpex Corp declined 1 percent while Nippon Oil and Cosmo Oil rose more than 2 percent each.
Seoul shares slipped as losses by financial firms weighed on the index amid regulatory worries, but gains in tech exporters capped the downside.
The Korea Composite Stock Price Index (KOSPI) closed 0.80 points lower at 1,647.04 points.
Banking issues lost ground amid Basel bank regulation concerns and following U.S. peers' falls overnight on renewed earnings outlook worries.
Banks face having to set aside more funds or raise fresh capital from investors in as little as three years, according to proposals by a global regulatory body that could change the way
bankers do business.
Financials also retreated after overnight losses in U.S. S&P financial after influential banking analyst Meredith Whitney cut her earnings estimateson Goldman Sachs Group and Morgan Stanley.
Shares in KB Financial retreated 2.96 percent and Hana Financial lost 2.87 percent.
Technology exporters rose amid recent weakness in the won currency, with Hynix Semiconductor, the world's No. 2 memory chip maker, up 2.61 percent. LG Display, the world's No. 2 maker of flat screens, advanced 2.75 percent. Samsung Electronics, the world's No. 1 memory chip maker, climbed 1.05 percent.
Retailers outperformed the broader market after data showed on Friday that sales at South Korea's top three department stores rose in November for a ninth consecutive month, although the growth pace has slowed.
Lotte Shopping ended flat and shares in Hyundai Department Store rose 0.45 percent.
Ssangyong Motor tumbled 15 percent to 3,455 won after volatile trade in the previous session, and share trade was suspended some 20 minutes before the market close after a South Korean court on Thursday backed the troubled automaker's rescue plan.
After the court's decision, Ssangyong said it had sought a writedown of shares, adding that more writedowns may be ahead.
Australia's benchmark index ended lower on Friday, pressured by Wall Street's slide and weak trading updates from Foster's Group and phone company Telstra.
The S&P/ASX 200 slipped 19.75 points to 4,650.5. New Zealand's benchmark NZX 50 index finished up 31.31 points at 3,154.23.
Telstra, Australia's dominant phone company, declined 3.4 percent to A$3.43 after it cut its sales revenue forecast, citing stiffer competition and a strong local currency.
Foster's shares retreated 1.8 percent to A$5.51 after it said it expected currency movements to cut as much as A$90 million from its wine earnings for the first half of 2010.
Shares in AMP, in a bid battle with National Australia Bank (NAB) for assets of AXA Asia Pacific, rose 2.5 percent to A$6.51 on speculation that AMP was now a takeover target.
NAB shares shed 2.5 percent to A$25.99, while AXA shares extended gains to close 1.9 percent higher at A$6.49, their highest in almost two years.
Shares in Qantas Airways climbed 0.4 percent to A$2.74 after the carrier said its low-cost airline Jetstar was in early talks with Malaysia's AirAsia for a joint venture.
Gold miners came under heavy pressure after a fall in the gold price, with Newcrest Mining down 3 percent and Lihir losing 4.6 percent.
Greater China markets tracked the region lower with the Hang Seng Index giving up 1 percent, the Shanghai Composite shedding 2.1 percent.
Hong Kong shares fell for a fourth day in a row,, falling 0.8 percent, dragged by banking stocks after regulators said lenders would have to set aside more profit or even raise capital protection under tough new proposals. Index heavyweight HSBC fell 1.59 percent to a three-week low at HK$86.90. Its London-listed shares fell 3.5 percent on Thursday. Standard Chartered slipped 2.26 percent to HK$190.4.
Real estate developer MinmetalsLand plunged over 12 percent to a near two-week low of HK$2.48 after the company said it would sell HK$955.5 million ($123.3 million) worth of new shares to its controlling shareholder, raising capital to fund the acquisition of land and for investment in real estate development projects.
Shares of China Steel, Taiwan's top steel maker, fell 1 percent on Friday after saying it will pay 8.5 billion yen ($95 million) to two Japanese firms for their stakes in a Brazilian project.
Taiwan stocks eked out gains of 0.15 percent, led by flat-panel makers on hopes of rising demand for computers and flat-screen TVs next year.
The TAIEX share index rose 11.46 points to 7,753.63.
AU Optronics, the world's No. 3 flat-panel maker, advanced 1.7 percent, with the broader optoelectronics sub-index was 0.64 percent higher.
In Southeast Asia, Singapore's Straits Times Index lost 0.4 percent. Noble Group slipped 0.3 percent after the firm named its COO Richard Leiman as its new chief executive. The commodity firm's current leader, Richard Elman, will assume the position of executive chairman.
Malaysia and Indonesia markets were closed for public holidays.
More From CNBC.com:
- Get After-the-Bell Dow 30 Quotes
- Credit Spreads and Libor Data
- Futures and Pre-Market Data
- Currency Data