Asian stock markets were mixed Friday after a jump in U.S. unemployment claims provided more evidence of an anemic recovery in the world's biggest economy.
Japanese stocks, closed the previous day for a holiday, were lower despite an apparent intervention in the currency market by the Bank of Japan to weaken the yen and amid news of Chinese restrictions on exports to Japan of rare earth elements which are used in advanced manufacturing.
Sentiment in Asia was undermined by new U.S. figures showed applications for unemployment benefits rose unexpectedly last week. The U.S. is a key market for Asia and a prolonged period of slow growth there could weigh on the profits of the region's exporters.
"The regional economic upswing is inevitably slowing down after expanding at an unsustainably fast pace since early 2009," Capital Economics said in a report. "Manufacturing is being dragged back by the slow pace of final demand growth in the U.S. and Europe."
Capital Economics expects economic growth in Asia excluding Japan to slow to 7 percent next year from 8.5 percent this year.
Also weighing on stocks was a lower reading on business activity in the 16 countries that use the euro and news that Ireland's economy shrank 1.2 percent in the second quarter.
The Nikkei 225 stock average lost 0.5 percent to 9,518.41. A strong yen kept pressure on exporters and technology shares, with Honda Motor Co. down 1 percent and camera maker Canon Inc. tumbling 1.8 percent.
In early afternoon trading in Tokyo, the dollar jumped suddenly from mid-84 yen to as high as 85.38 yen before slipping back under 85 yen marking the BOJ's second move to weaken in the yen in just over a week.
"It appears that authorities have intervened" to buy dollars and sell the yen, said Yu Yokoi, a foreign exchange dealer at Mizuho Bank Ltd. in Tokyo.
Reports of Chinese restrictions on shipments of rare earths metallic elements such as Lanthanum and Gadolinium that are crucial for superconductors, computers and hybrid electric cars pummeled some high-tech companies. Shares of Shin-Etsu Chemical Co., which makes rare earth magnets, tumbled 3.1 percent and Hitachi Metals Ltd. retreated 2.9 percent.
Elsewhere, Hong Kong's Hang Seng index rose 0.3 percent to 22,109.41 while Australia's S&P/ASX 200 fell 0.6 percent to 4,605.60.
Benchmarks in India, South Korea, Singapore, and Indonesia gained while Taiwan and Malaysia fell. Financial markets in mainland China are closed Friday for a national holiday.
Analysts say that even if Asian growth slows next year, it will outpace developed economies such as the U.S., Japan and Europe. Emerging markets will likely account for 2.3 percentage points of the world's 3.7 percent gross domestic product growth rate this year, and a bigger share next year, Citigroup said in a report.
The Dow Jones industrial average on Thursday fell 76.89, or 0.7 percent, to close at 10,662.42.
The Standard & Poor's 500 index fell 9.45, or 0.8 percent, to 1,124.83, falling back below a closely watched threshold of 1,131. That had been the high end of its recent trading range until Monday, when the index charged above that level and stayed there, something analysts see as a bullish sign. Prior to Monday, the S&P had only crossed above 1,131 one time since June 21.
The Nasdaq composite index fell 7.47, or 0.3 percent, to 2,327.08.
In currencies, the dollar rose to 84.95 yen from 84.50 yen late Thursday in New York. The euro advanced to $1.3340 from $1.3319.
Benchmark crude for November delivery was down 26 cents at $74.92 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 47 cents to settle at $75.18 on Thursday.