Tokyo investors will be keeping an eye on next week's policy meeting of the European Central Bank after Switzerland's decision to remove its currency cap with the euro, while expectations are high for a new round of stimulus. "The upcoming ECB meeting on Thursday will be the biggest event next week," said Kenzaburo Suwa, strategist at Okasan Securities in Tokyo.
There is widespread speculation that the ECB will announce a large asset-buying programme, or quantitative easing, to counter deflation and weak growth in the eurozone.
"Trading has been volatile recently because of the speculation," Suwa said. "The market is expected to regain its calm once the ECB makes an announcement."
On Friday, the Nikkei 225 index at the Tokyo Stock Exchange, which was off nearly 3.0 percent at one stage, lost 244.54 points to end at 16,864.16. The benchmark index lost 1.94 percent over the week.
The Topix index of all first-section shares was down 0.93 percent, or 12.87 points, at 1,363.73. It fell 1.22 percent in the holiday-shortened trading week.
The Japanese market - which added 1.86 percent Thursday - plunged at the open as a sharply stronger yen dented exporter shares while firms with ties to Switzerland also fell.
On Thursday, the Swiss National Bank (SNB) said it no longer needed the limit of 1.20 francs to the euro, which it put in place three years ago during the European debt crisis.
Minutes after the announcement, the franc surged 30 percent to 0.8517against the single currency before ending the day at 1.0035. In Asian trade, it rose again, sitting at 0.9945.
The news rattled global markets as investors rushed into safer investments, such as the yen.
Earlier in the day, the dollar dropped to a low of 115.84 yen, from 116.25 yen in New York and sharply down from 117.70 yen in Tokyo earlier Thursday.
In afternoon Tokyo trade, the dollar fetched 116.57 yen.
"Keeping the franc weak against the euro might have been too costly for the SNB, especially with the European Central Bank potentially adding more stimulus," Juichi Wako, a senior strategist at Nomura Holdings, told Bloomberg News. Japanese exporters took a hit Friday from the stronger yen as it makes them less competitive overseas and dents profits.
Toyota fell 0.15 percent to 7,514.0 yen, while Sony dropped 4.63 percent to 2,384.0 yen as Canon lost 1.18 percent to 3,757.5 yen.
Chugai Pharmaceutical, an importer of goods from Switzerland, fell 2.47 percent to 3,150.0 yen while drugmaker Sosei Group, which relies on the Swiss market for the majority of its sales, tumbled 4.59 percent to 3,945.0 yen.
Power tool maker Makita, whose biggest market is Europe, fell 2.47 percent to 5,130.0 yen.
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