The benchmark Nikkei 225 index at the Tokyo Stock Exchange was down 55.46 points at 8,737.66 at the close. The broader Topix index of all first-section issues sagged 1.71 points, or 0.23 percent, to 755.70.

"Machinery shares are being hit hard," Kenichi Hirano, an operating officer at Tachibana Securities, told Dow Jones Newswires.

Recent data on "industrial output, GDP and machinery orders indicate a severe outlook despite earlier expectations for Japan's V-shaped recovery from autumn," Hirano said.

Just before the opening bell, revised government data showed Japan's economy shrank by an annualised 2.1 percent in the April-June quarter following the March 11 quake and tsunami disaster.

It was more severe than last month's preliminary reading of a 1.3 percent shrinkage but market players largely discounted the data as the revision was in line with expectations.

Among machinery shares, Fanuc tumbled 7.57 percent to 10,730 yen and Komatsu dropped 4.46 percent to 1,797 yen.

Investors digested US President Barack Obama's announcement of a $447 billion jobs plan amid persistent concerns over the American economy.

Addressing Congress, Obama said the jobs plan would give a "jolt" to the stalled economy at an urgent time for a nation facing a deep economic and political crisis.

"The sum of the jobs plan was bigger than expected but it will take some more time to see it actually implemented. The market reaction was limited," said Yumi Nishimura, senior market analyst at Daiwa Securities.

Tokyo shares received support after Chinese data showed a slight slowdown in the nation's inflation rate for August from a more than three-year high in July.

Trading remained slack ahead of the Group of Seven finance ministers' meeting in France, where participants are expected to work towards the revival of global growth and an easing of the European debt crisis.

Companies exposed to Europe fell as the yen climbed against the euro overnight. The euro stood at 107.66 yen in the afternoon trade compared with 108.81 yen Thursday in Tokyo.

Nintendo was down 2.30 percent at 13,160 yen on concerns about the yen's strength and following industry data indicating sluggish sales of its 3DS handheld game console even after it slashed the price by 40 percent.