The Nikkei lost 115.61 points, or 1.1%, to 10,011.47 following the prior session's 0.4% rise. The fall under the psychologically important 10,000 level was the first for the index since March 13.
For the week, the Nikkei fell 1.2% but remains up 18% year-to-date.
The Topix index of all the Tokyo Stock Exchange First Section issues also slipped 9.54 points, or 1.1%, to 852.53, with 31 of 33 subindexes ending in negative territory.
Trading volume was relatively light ahead of the weekend, totaling just 1.76 billion shares and well below the 2 billion mark for the second straight session.
The major indexes were decidedly negative from the start, following a sharp fall in overseas markets on weak industrial data out of China, Germany, and France.
Daiwa Securities head of investment strategy and research department Kazuhiro Takahashi said the Nikkei's short-lived sub-10,000 dip doesn't necessarily signal a shift to bearish sentiment in light of the market's recently rally.
"Concern over a global economic slowdown isn't that strong at this stage, as hopes for good U.S. employment figures at the beginning of April remain supportive," said Daiwa Securities senior market analyst Yumi Nishimura.
The bullish interpretation wasn't universal, however. "The scenario for world economic growth suddenly smacks less of a proper recovery and more about simply replacing inventories," said an equity strategist at a foreign brokerage. "Global equities' reaction to this is logical, since recent gains have been based on a return to growth."
The surge in the yen against both the dollar and euro hurt large-cap exporters that had risen along with the Japanese currency's recent weakness. Toyota Motor fell 2.0% at Y3,465, while Honda fell 2.9% at Y3,180. Sony also fell 3.1% at Y1,680, while Tokyo Electron surrendered 2.3% at Y4,755.
Canon fared better than most, losing just 0.8% at Y3,870. One technology sector analyst pointed out that the firm has based it earnings forecasts for the current fiscal year on a dollar value of Y75, affording it room to revise up its earnings views.
China-linked shares fared poorly for the third straight day. Hitachi Construction Machinery slipped 1.5% at Y1,795, Komatsu fell 1.9% at Y2,344, and Fanuc lost 1.0% at Y15,020, respectively.
Sharp's stock hit its lowest level on a split-adjusted basis since 1980, despite salient selling factors. Latent concerns about a forthcoming share issuance may again be re-surfacing, especially as the firm's balance sheet is in dire shape, according to market sources. "It's a well-known fact that the company really needs to raise capital," said a capital markets banker at a foreign investment bank. "The only question is when."
Real estate developers continued to underperform after Japan's Land Ministry published data late Thursday showing that official land prices for 2012 fell on-year nationally, albeit less sharply than the year before. Mitsui Fudosan lost 1.9% at Y1,559, while Mitsubishi Estate relinquished 2.8% at Y1,429. Credit Suisse analysts wrote in a client report that while the data offered no surprises, Tokyo-area prices may well show an upward trend in 2013.
June Nikkei 225 futures closed down 110 points, or 1.1% at 9930 on the Osaka Securities Exchange.
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