ANA Holdings fell 2.42% after Jiji press reported the airline would post its worst current profit for nine months through December. Japan Airlines fell 1.77%.
Japanese stocks also tracked the US market, which ended lower on Thursday ahead of President-elect Joe Biden's announcement of a stimulus package designed to jump-start the economy.
Pharmaceuticals Astellas Pharma was down 0.48 percent at 1,648.5 yen, Chugai was down 0.86 percent at 5,787 yen and Shionogi was down 1.16 percent at 5,817 yen after brokerage firms downgraded their evaluation of its shares.
The smaller Shenzhen index was up 0.74%, the start-up board ChiNext Composite index was higher by 1.14% and Shanghai's tech-focused STAR50 index was up 0.6%?.
The sudden lift in bond yields undermined gold, which pays no interest, and the metal fell back 1.1% to $1,828 an ounce from its recent peak of $1,959.
The benchmark Nikkei 225 index, which jumped 16 percent last year, lost 0.68 percent, or 185.79 points, to 27,258.38, while the broader Topix index was down 0.56 percent, or 10.09 points, to 1,794.59.
The stocks that gained the most among the top 30 core Topix names were Daiichi Sankyo Co Ltd up 2.26%, followed by Nippon Telegraph and Telephone Corp rising 1.95%.
"The global economy in 2021 should move gradually toward normalisation... With excessive liquidity, the market's upward momentum should strengthen further," the brokerage said.