Tokyo investors will keep a close eye on Chinese markets and geopolitical tensions next week after the benchmark Nikkei index started 2016 with a record losing streak. The weak finish marked the first time the index kicked off a new year with five straight losses.
The bluechip Nikkei - among the best-performing indices in 2015 - was hammered this week as Chinese share markets went into freefall, sending shivers across global trading floors.
North Korea's claim to have detonated a hydrogen bomb this week and growing Middle East tensions added to the gloom.
"We have to continue to closely watch China-related factors next week - the yuan, Shanghai stocks and the Chinese economy," said Shinichi Yamamoto, a dealer at Okasan Securities.
"Volatile trading is expected to continue for now as players will stay vigilant against a possible further decline in the Nikkei index.
"Among other factors to watch are crude oil prices, the yen and the situation in the Middle East."
Also in focus will be US jobs data due later Friday.
Beijing moved to ease the market panic, removing a mechanism blamed for fuelling sharp sell-offs that suspended mainland markets early twice in the space of four days.
Authorities also set the central rate for the yuan currency marginally higher against the US dollar on Friday, ending eight days of falls that were also blamed for the global turmoil.
Beijing's "trial and error experiments" may be doing more harm than good, analysts said, as fears about the health of the world's number two economy gather pace.
"Chinese authorities need to take their time in maturing their market, but instead they're continuing to fumble through with trial-and-error experiments," Juichi Wako, a senior strategist at Nomura Holdings, told Bloomberg News.
Despite ending the morning higher, the Nikkei fell 0.39 percent, or 69.38 points, to 17,697.96 by Friday's close. It dropped 7.02 percent over the first trading week of 2016.
The broader Topix index of all first-section shares dropped 0.73 percent, 10.62 points, to 1,447.32. It lost 6.46 percent over the week.
Among the biggest decliners, market heavyweight Fast Retailing fell 2.33 percent to 38,140 yen on Friday as it warned over poor quarterly financial results tied to weak sales at its Uniqlo clothing chain. Mobile carrier SoftBank sank 0.97 percent to 5,695 yen, banking giant Mitsubishi UFJ dropped 0.79 percent to 707.7 yen and rival Sumitomo Mitsui Financial Group was down 0.78 percent at 4,309 yen.
Automaker Toyota fell 0.49 percent to 6,864 yen. A weaker yen - a plus for major exporters' profitability - boosted some shares.
Factory robotics maker Fanuc rose 0.98 percent to 19,125 yen and Sony rose 1.00 percent to 2,824.5 yen. The dollar rose to 118.51 yen from 117.65 yen Thursday in New York, although it is still well down from levels above the 120 yen mark seen early this week.
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