"Even though (corporate) Japan's current fundamentals are solid, investors are making decisions based on a six to 10-month outlook, which is looking increasingly cloudy with the Saudi unrest," Hirochi Nishi, general manager of the equity division at Nikko Cordial Securities, told Dow Jones Newswires. In Saudi Arabia, a witness said police shot and wounded three protesters in the oil-rich Eastern Province while trying to disperse a rally calling for the release of prisoners, raising fears regional turmoil was spreading. Moody's on Thursday lowered Spain's long-term debt rating by a notch to Aa2 with a negative outlook, a serious setback to the country's efforts to quell fears it may need an international financial rescue.

"Worries over Europe's economic health are resurfacing, but that takes a backseat to the Saudi Arabia situation," said Yumi Nishimura, deputy general manager of investment strategy at Daiwa Securities.Oil was mixed in Asian trade on Friday, with New York's main contract, light sweet crude for delivery in April rising two cents to $102.72 per barrel. Brent North Sea crude for April delivery was down six cents to $115.37. Fast Retailing, which operates cheap-chic clothing store Uniqlo, was off 0.87 percent at 12,510 yen. Softbank, Apple's carrier in Japan, was off 1.04 percent at 3,320. Snack maker Calbee enjoyed a strong debut on the Tokyo Stock Exchange, and was up 8.5 percent at 2,279 after opening at 2,100.