Asian markets traded lower in the morning as investors await Cypriot banks to reopen after the recent bailout deadlock and Italian political concerns rebound.
Japan's Nikkei 225 average index fell 1.6 percent or 195.18 points to 12298.6 while South Korea's KOSPI was down 0.3 percent or 6.51 points to 1986.9. China's Shanghai Composite Index was down 2.3 percent or 52.88 points to 2248.4.
Australia's S&P/ASX 200 slipped 0.3 percent or 15.60 points to 4979.4 while Hong Kong's Hang Seng traded 1 percent or 228.73 points lower to 22236.1. It is the last trading day of the week for both the bourses.
Banks in Cyprus are set to resume functioning later in the day after remaining closed for nearly two weeks with major capital controls to prevent heavy withdrawals. According to a Reuters report that cited a central bank official, limits will be imposed on use of cheques to businesses and cash withdrawals, apart from scrutinising commercial transactions of over €5000. These measures are now expected to be in effect for four days.
Italian economic concerns rebounded as hopes of a stable government faded after Democratic Party leader Pier Luigi Bersani's attempts to form an alliance failed. The anti-establishment Five Star Movement rejected Bersani's calls for support.
Renewed fears pushed the country's five-year bond yields to a multi-month high on weak demand at an auction held yesterday and weighed on the euro.
In Japan, fresh economic indicators underscored the challenges ahead of government's efforts to boost consumer demand and boost inflation rates. Official data released early in the day showed that retail sales slumped 2.5 percent year-on-year in February, weaker than forecasts of a 1.2 percent fall.
The weak figures come as Bank of Japan's new governor Haruhiko Kuroda said that the country's economy has stopped weakening and should pick up by mid-year.
In China, financial sector came under pressure after the country's banking regulator announced plans to impose tighter controls over wealth-management products.
Technology and automobile shares slumped in Tokyo. Sony Corp was down 3.9 percent while Citizen Holdings fell 3.4 percent. Mitsubishi Motors was down 3.9 percent while Isuzu Motors slipped 3.8 percent.
Banks traded lower in Hong Kong. Bank of Communications was down 4.3 percent while Bank of China traded 2.2 percent lower. In Shanghai, China Merchants Bank fell 4.6 percent while China Citic Bank Corp slid 7.2 percent.
Financial stocks traded lower in Sydney as well. Commonwealth Bank of Australia was down 0.6 percent while Australia and New Zealand Banking Corp eased 0.2 percent.