The Nikkei 225 index at the Tokyo Stock Exchange fell 98.36 points to 8,390.35.
The Topix index of all first-section issues lost 6.68 points or 0.91 percent to 729.60.
Olympus shares briefly fell more than four percent to 985 yen after Michael Woodford, the whistle-blowing former chief executive, said he would abandon his bid to take over the helm of the scandal-hit company.
The stock then recovered and ended up 2.13 percent at 1,053 yen with investors believing Woodford's withdrawal unlikely to have a big impact on the company's business.
The Nikkei was down on a lack of buying incentives ahead of a meeting between the German and French leaders slated for Monday when Japanese markets are shut for a holiday, brokers said.
A persistently weak euro against the yen weighed on Tokyo stocks.
There were few catalysts to support a recovery in the euro against the yen, brokers said.
"Investors are trying to find something to signal a turnaround in the euro but see nothing on the horizon," said Daiwa Securities head of investment strategy and research department Kazuhiro Takahashi.
Companies with large exposure to Europe fell, with Sony off 2.03 percent at 1,345 yen and Nikon down 0.98 percent at 1,716 yen.
The euro briefly fell to a new 16-month low, fetching $1.2763 in Tokyo late afternoon trade.
The euro was at 98.60 yen against 98.67 yen in New York, where it fell to an 11-year low of 98.48 yen.
Deep concerns over the eurozone debt crisis resurfaced with a vengeance Thursday, as Italy and Spain came under intense pressure on the markets.
Spain said its banks would need 50 billion euros, more than first expected, to cover bad loan losses while Italian Prime Minister Mario Monti rattled nerves with an unannounced visit to Brussels.
Fast Retailing rose 0.36 percent to 13,850 yen after the company said December same-store sales at its Uniqlo unit jumped 14.2 percent on year.