Japan's Nikkei average dropped 2.46 percent to a three-month closing low on Friday as disappointing Japanese growth data added to nagging worries about the US economic outlook and triggered broad-based selling.
Investors rushed to offload domestic-business oriented stocks such as builders and real estate firms after government data released before the showed April-June gross domestic product (GDP) grew a real 1.7 percent on an annualised basis, far below the median forecast in a Reuters poll of 4.1 percent.
Exporters were also dumped with Canon Inc tumbling to a seven-month nadir after record-breaking oil prices sent US stocks to new lows for the year. The Nikkei fell 270.87 points to 10,757.20, the lowest closing level since May 18 when it ended at 10,711.09.
The 2.46-percent drop on the Nikkei was also the biggest daily percentage loss since May 17 when it lost 3.18 percent. For the week, the Nikkei lost 1.96 percent, adding to the previous week's 3.12 percent fall. The broader TOPIX index shed 1.83 percent to 1,096.81.
"The GDP outcome was lower than what we had expected, and it also highlighted concerns that growth in Japan's economy might have peaked out, or will peak out in the July-September period," said Takahiko Murrain, a general manager of equities at Nozomi Securities.
"We are also concerned that higher oil prices might force Japanese companies to cut their annual earnings target later this year."
Others voiced concerns that disappointed foreign investors, who had expected a positive surprise from the GDP data, might start unloading Japanese stocks.
The data showed capital spending was flat in real terms. Spending for electronic communication devices and machinery to make semiconductors rose but spending for construction fell after the completion of a large project in the previous quarter and a drop in demand for trucks.
The news helped knock down general contractor Obayashi Corp, whose shares tumbled 3.85 percent to 525, yen.
Condominium developer Haseko Corp dropped 4.24 percent to 226 yen.
Mitsui Fudosan Co Ltd and other real estate stocks also took a beating after a report on Thursday by office building broker Miki Shoji Co showed that the overall office vacancy rate in five wards in central Tokyo rose to 7.42 percent in July from 7.22 percent in June.
Mitsui Fudosan, Japan's biggest real estate firm, sank 3.78 percent to 1,198 yen.
Canon, Japan's biggest maker of office machines and which generates about three quarters of its sales overseas, lost 3.51 percent to 4,950 yen, the lowest closing since December 29.
Trading was moderately active with 1.03 billion shares changing hands on the first section compared with 886.45 million shares on Thursday. Decline's outnumbered gainers 1,357 to 128.