Europian leaders sealed a new fiscal pact for tougher budget discipline in a 10-hour meeting in Brussels on Friday, but failed to persuade all 27 member states to agree a treaty change.
The Nikkei dropped 1.5 percent to 8,536.46, losing 1.2 percent for the week after logging a weekly gain of almost 6 percent last week.
It slipped below its 75-day moving average of 8,633 and briefly broke below another major support at its 25-day moving average, now 8,523.
The broader Topix index shed 0.9 percent to 738.12.
Despite the lack of confidence among investors, the Chinese government in Beijing expressed confidence in the EU’s ability to surmount the crisis.
“We’re still awaiting the final outcome of the meeting. We have always stated that China has always had confidence the EU has the ability and the wisdom to resolve the problems related to the temporary difficulties it currently faces, and that stance has not changed,” Foreign Ministry spokesman Hong Lei said at a daily news briefing.
The benchmark Shanghai Composite Index closed down 0.62 percent, or 14.55 points, to close at 2,315.27.
Taiwan stocks ended down 1.28 percent, while the main TAIEX index fell 89.60 points to 6,893.30, after opening down 1.31 percent.
The Taiwan dollar was slightly weaker at T$30.224.