Asian markets were mostly lower Friday, as poor European data and caution before the Group of Twenty meeting this weekend weighed on stocks.
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Regional stocks started the day lower, though some managed to climb back to the break-even mark, after mixed overnight cues. In Europe, there was disappointing economic data as gross domestic product for the euro zone shrank by 0.6% in the fourth quarter�the third straight quarter that the currency block failed to grow, and the deepest rate of contraction in four years. This was offset to some extent by better-than-expected weekly U.S. employment data.
"We're sort of desensitized to a certain extent to a proper knee-jerk reaction, but given soft leads from Europe, it is led to declines in Asia," said Jason Hughes, head of premium client management at IG Markets in Singapore.
The yen remained in focus on Friday, before a meeting of the Group of Twenty in Moscow over the weekend. The market was waiting to see whether attendees voice their disapproval about the sharp depreciation of the Japanese currency since November.
The dollar softened against the yen Friday, last at �92.48 compared with �92.86 late Thursday in New York, after falling 0.6% overnight. The yen strengthened following a Wall Street Journal report that said Toshiro Muto is a leading candidate to replace Masaaki Shirakawa as governor of the Bank of Japan.
The yen's new found strength prompted a sharp decline in Japanese stocks, with the Nikkei down 1.8%. Local exporters reacted badly to the firmer currency: Toyota Motor Corp. dropped 2.6%, Sony Corp. was 4.0% lower, while Hitachi retreated 1.7%.
Also in Tokyo, Kirin Holdings sank 4.6% as investors were disappointed by its �90 billion 2013 net profit forecast. The news comes just one day after Kirin's main rival Asahi Group Holdings jumped 5.8% after releasing positive results.
In Australia, the S&P/ASX 200 was flat as the earnings season continued in Sydney, with shares of two large index constituents falling after their most earnings reports failed to excite investors.
Anglo-Australian mining giant Rio Tinto fell 2.1% after the company reported its first full-year loss�the result of declining commodity prices and over $14 billion in impairment charges.
Australia's third largest bank by market value, Australia & New Zealand Banking Group dropped 0.6% after the lender reported a 20% drop in its first quarter profit, which it blamed on lower investment returns and weakness in the Australian economy.
Investors were also disappointed by Oversea-Chinese Banking Corp.'s earnings in Singapore. The bank dropped 1.1%, despite reporting a 12% increase in net profit in the fourth quarter. Net profit for 2012 came out at S$3.99 billion, beating consensus forecasts of S$3.59 billion.
Hong Kong's Hang Seng Index dropped 0.1%, while Singapore's FTSE Strait Times Index was down 0.4% and South Korea's Kospi was up 0.1%.
Markets in mainland China and Taiwan, which have been closed for the week for Lunar New Year public holidays, will resume trading on Monday.
Write to Daniel Inman at daniel.inman@wsj.com
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