The Nikkei average slid to its lowest close in seven weeks on Friday, dropping 1.54 percent as exporters such as Toyota Motor Corp fell after the yen rose to an eight-month high against the dollar.
NEC Corp and Konica Minolta Holdings Inc were among firms to post steep declines due to disappointing profit forecasts, but Canon Inc gained on news of a stock split and increased dividend.
Tokyo Electron Ltd may be in focus on Monday. Following the close of trade, the chip-equipment maker posted a 15.7 percent rise in annual profit, and forecast further growth for this business year as semiconductor makers boost spending to meet growing demand.
"It is the currency level and earnings results," said Hideyuki Suzuki, investment information manager at SBI Securities, referring to the Nikkei's four-day slump, its longest since late October.
"When investors looked at earnings forecasts, they found a lot of companies that fell below analysts' expectations," he said.
The Nikkei finished down 260.36 points at 16,601.78, its lowest close since March 24.
The TOPIX index ended down 1.35 percent at 1,688.18.
The yen was around 110.01 to the dollar by the close of Tokyo stock trade. Earlier it hit an eight-month high of 109.91.
A stronger yen is a minus for companies such as Toyota, as it eats into profits when earnings from abroad are brought home.
Toyota, the world's most profitable auto maker, extended its decline into a fifth session, losing 2.6 percent to 6,370 yen.
Electronics conglomerate NEC Corp dropped 4.9 percent to 741 yen after it posted an 84 percent fall in annual profit, due to its struggling mobile phone and chip operations, and forecast a weaker-than-expected recovery this business year.
Shares of Konica Minolta Holdings Inc slid 7.4 percent to 1,368 yen after the precision-equipment maker forecast a 4 percent decline in operating profit for the current year.
But Canon, the world's top maker of digital cameras, rose 2 percent to 8,670 yen. It announced a 1.5-for-1 share split on Thursday for shareholders as of June 30. It also raised its dividend forecast for calendar 2006 to 110 yen per share from 100 yen.
With oil prices above $72 a barrel and with growing concerns about further interest rate increases in the key US market, investors have plenty of uncertainties to worry about at the moment, said Shigemi Nonaka, chairman of Polestar Investment Management.
Shares of soft-drink manufacturer Kirin Beverage Corp surged 11.5 percent to 3,340 yen, after brewer Kirin Brewery Co Ltd said it would absorb its affiliate in a deal worth about 75.2 billion yen ($682 million).
Shares of Kirin Brewery gained 7.8 percent to 1,909 yen.
Shares of Nippon Yusen KK turned positive and ended the day up 2.3 percent at 715 after Japan's largest shipper forecast a smaller-than-expected profit decline.
Japan Tobacco Inc, gained 3.9 percent to 454,000 yen after the world's third-largest tobacco company said it would raise prices of 13 of its cigarette brands by 30 yen a pack, starting July 1.
Trade was moderate, with 1.99 billion shares changing hands on the Tokyo exchange's first section, compared with last year's daily average of 2.07 billion.
Decliners outnumbered gainers by a ratio of more than 5 to 1.