The Nikkei tumbled 1.26 percent in the afternoon, Hong Kong was 0.40 percent off by the break and Sydney fell 0. 83 percent, while Shanghai gave up 0.19 percent.

Seoul slipped 0.32 percent.

Ratings agency S&P on Thursday cut Tokyo's long-term sovereign debt to "AA minus" from "AA", saying it expected its massive fiscal deficits to stay high in the coming years.

"The Democratic Party of Japan-led government lacks a coherent strategy to address these negative aspects of the country's debt dynamics," S&P said after the downgrade, Japan's first since 2002.

The move came as little surprise to some as Japan has the highest debt of any industrialised nation, at about 200 percent of gross domestic product, and S&P warned that the problem would only peak in the mid-2020s.

The announcement sent the yen tumbling to 83.20 against the dollar from 82.12 Thursday, but the Japanese unit bounced back on Friday.

The dollar slipped to 82.71 yen from 82.86 in New York late Thursday. But it was still sharply higher than 82.12 yen seen Thursday in Tokyo.

The euro fetched 113.37 yen from 112.69 yen and edged down to $1.3699 from $1.3730.

"The news comes at a time when markets are already focused on sovereign debt, and will undoubtedly shake nerves," David Croy, interest rates strategist at ANZ Bank in Wellington, told Dow Jones Newswires.

Japan's debt crisis comes after Ireland and Greece last year asked the European Union and International Monetary Fund for a bailout while concerns are growing that Spain, Portugal and Italy might also need help.

However, Croy added: "It's difficult to envisage significant contagion at this stage, particularly with so many bonds held onshore.

"After all, it's long been known that Japan has mammoth debts, but the lack of progress is what seems to have got the ire of S&P."

The Japanese market was also weighed by weak earnings reports from some big players.

Nintendo fell 0.6 percent after it said group net profit plunged 74.3 percent for the nine months ended December as it was hit by a huge foreign exchange loss and a sales slump.

Canon fell 3.1 percent as its October-December net profit slipped 12 percent, while NEC tumbled 2.8 percent following news it expected a wider then previously forecast loss in the three months to December.

On oil markets, New York's main contract, light sweet crude for March delivery, was down 37 cents at $85.27 per barrel and Brent North Sea crude for March was up 24 cents at $97.63.

Gold opened at $1,314.50-$1,315.50 an ounce in Hong Kong, sharply down from Thursday's finish of $1,341.00-$1,342.00.

In other markets:

-- Manila fell 0.50 percent, or 20.15 points, to 3,970.34.

Manila Electric was down 7.6 percent at 231 pesos, conglomerate Alliance Global fell 1.2 percent to 11.80 and Philippine Long Distance Telephone shed 0.9 percent to 2,478.

-- Wellington was flat, edging up 1.7 points to 3,352.6.

Air New Zealand fell 0.7 percent to NZ$1.41, Telecom rose 0.4 percent to NZ$2.32 and retailer The Warehouse Group slipped 0.8 percent to NZ$3.66.