Asian Stocks End Lower; Nikkei Dips 0.4%

HONG KONG -- Asian stocks continued to sag Friday as investors failed to get inspiration from U.S. corporate earnings and signs of deflation emerged in Japan.

The back-and-forth trade wrapped up a lackluster week that saw the region's major benchmarks pull back amid concerns the recent rally had overestimated the speed and scale of any recovery in global growth. Tokyo's market extended its losing streak to eight straight days, while oil prices fell below $60 a barrel.

Investors were less than encouraged by the tepid gains on Wall Street, where stocks inched higher following aluminum maker Alcoa's(AA Quote) narrower-than-expected second-quarter loss. Weak sales reports from U.S. retailers and more pain in the country's labor market did little to lift the mood.

The markets cratered after last week's troubling signs of growing job losses in the U.S. and Europe led investors to reassess the recovery story that drove markets higher between March and June.

Now, analysts say there seems to be a lack of direction -- evidenced by low volumes and volatility -- as many investors await more guidance or take a break during the summer months.

"I think after the massive rally it's only natural that markets are consolidating now," said Khiem Do, a Hong Kong-based fund manager who helps oversee more than $8 billion in Asian equities at Baring Asset Management. "I think the surprise is that the correction has not been more severe."

Markets in Asia gyrated throughout the day before ending lower.