Japan's Nikkei average fell 1.1% on Friday, on track for its biggest one-day percentage drop in two months, on concerns about global economic growth after factory activity data showed a slowdown in China and the euro zone's two largest economies.
The fears of slower growth lifted the yen, which further weighed on Japanese exporters, with Toyota Motor Corp losing 1.6%, Honda Motor Co off 2.1% and Sony Corp down 2.5%.
The Nikkei was down 107.32 points at 10,019.76 and the broader Topix fell 0.9% to 854.08, while the yen was last traded at 82.670 to the dollar after hitting a one-week high of 82.329 on Thursday, well off an 11-month low of 84.187 on March 15.
However, market participants said the sell-off offered buying opportunities for longer-term investors as they remained upbeat on the outlook of Japanese equities.
"If there are names you like, you should pick them up from here, especially names that are heavily down today," a trader at a foreign bank said, citing life insurers, and food and beverage firms among his picks.
The insurance sector shed 1.9% and the foods subindex eased 0.3%.
Financials were also down as investors took profits from this year's rally. Nomura Holdings, Japan's top investment bank, lost 2.6%, while Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group both fell 1.4%.
Despite Friday's sell-off, the benchmark Nikkei is still up 18.5% this year, boosted by a run of strong U.S. economic data and accommodative monetary policies by global central banks.
Deutsche Bank said there were still pockets of good value in Japanese shares, especially among exporters, following the bounce.
"Even after the rally, there are some interesting value opportunities in Japanese equities and for patient investors we find more distressed value in Japanese equities than in the credit-stricken European equities," Deutsche said in a report.
"The new story is that we may now be facing a structural change regarding the multi-year strengthening of the yen."
According to Thomson Reuters Datastream, the Topix carries a 12-month forward price-to-book ratio of 0.98, much cheaper than the S&P 500's 2 and the STOXX Europe 600's 1.39.
