TOKYO Japan's Nikkei index fell on Friday to post its third straight weekly loss after a Spanish bond auction failed to extinguish fears of a renewed euro zone debt crisis, but a weaker yen offered support.
The Nikkei closed 0.3 percent lower at 9,561.36, below i ts 13-week moving average near 9,575, and was down 0.8 percent this week.
The benchmark has fallen 5.2 percent this month on concerns of a slowing U.S. economic recovery and Spain's finances, after rallying more than 19 percent in January-March to log its best first quarter performance in 24 years.
"Spain is still a worry and French bond yields are back up, so the hope that the Nikkei might hit 10,000 again has pretty much vanished," said Yoshihiko Tabei, chief analyst at Kazaka Securities.
Expectations that the Bank of Japan will announce further monetary easing steps on April 27 weighed on the yen, lending support to some exporters, with TDK Corp (6762.T), Nissan Motor Co (7201.T) and Nikon Corp (7731.T) up between 0.3 and 0.6 percent.
However, the weaker exchange rate did not prevent Toshiba Corp (6502.T) from shedding 2.4 percent after SanDisk Corp SNDK.O said a glut of memory chips in the market will continue to hurt prices for the rest of the year.
Steelmakers also underperformed the market, hurt by JFE Holdings Inc (5411.T), which dropped 3.3 percent after the world's fifth-largest steelmaker reported a 68 percent drop in full-year profit because of a stronger yen and lower product prices, and did not give a profit forecast for the year ending March 31.
Rupert Kimber, a London-based fund manager at Tiburon Partners, said Japanese companies, which tend to err on the side of caution, would be conservative in their earnings forecasts.
"Essentially you'd expect Japanese corporate earnings to be growing reasonably firmly in the forthcoming fiscal year period," he said.
Japanese companies had suffered last year from supply disruption after a massive earthquake in March 2011 and Thai floods.
"I'm sure that Japanese companies will always be conservative with their forecasts. That may upset people with a very short-term time horizon," Kimber said. "You may also see some companies not making forecasts, which again will upset short-term traders."
The iron & steel sector was down 1.7 percent, while Nippon Steel Corp (5401.T), Yamato Kogyo Co Ltd (5444.T) and Daido Steel Co Ltd (5471.T) lost between 0.6 and 1.9 percent.
Japan's shippers subindex .ISHIP.T advanced 2.6 percent as the best sectoral performer, however, after hitting a two-month trough this week, as expectations grew that global container rates could recover further, while JPMorgan issued an upbeat report on the sector.
Mitsui O.S.K. Lines Ltd (9104.T), Nippon Yusen KK (9101.T) and Kawasaki Kisen Kaisha Ltd (9107.T) rose between 1.7 and 4.9 percent.
The broader Topix dropped 0.3 percent to 811.94.
Trading volume on the main board was thin, with 1.53 billion shares changing hands, down from 1.63 billion on Thursday.
Olympus Corp (7733.T), struggling to emerge from a $1.7 billion accounting scandal, jumped 6.4 percent after shareholders of the endoscope and camera maker approved all director nominees and its restated earnings at an extraordinary meeting.
"It will take them a long time to rebuild the business but the fact that they have approved the directors means that the new management structure is now in place," said Yoshihiro Ito, chief strategist at Okasan Online Securities.
(Additional reporting by Sophie Knight and Mari Saito; Editing by Ed Lane)