Updated from 1:44 a.m. EDT

Asian stocks closed lower Friday on fears that even if the U.S. government passes a $700 billion rescue plan for the financial sector it won't prevent a recession in the U.S.

The Nikkei closed down 216.62 points, or 1.9%, to 10,938.14, the lowest close since May 2005. The Hang Seng index in Hong Kong closed for the day down 2.9%, while the S&P/ASX 200 index in Australia saw a decline of 1.4%.

Shares of

Toyota Motor

(TM) - Get Report

, and other auto makers, closed lower after reporting weak sales in the U.S. earlier this week. Toyota said Thursday it plans to offer incentives on 11 vehicles for October after experiencing a U.S. sales decline of 32% last month.

Stocks in the U.S. finished with steep losses Thursday as weak economic data, new signs of a lending crunch and uncertainty about the upcoming House of Representatives' vote on the bailout plan for financial firms kept buyers away from the market.

After the close of Wednesday's trading, the Senate passed the bailout bill with a 74-25 vote. The House of Representatives had rejected an earlier version of the proposal on Monday, and the stock market responded with one of its worst performances. The House is expected to vote on the revised package Friday.

Stocks in Europe were narrowly mixed. The FTSE 100 index in London fell 0.2%, while the DAX in Frankfurt rose 0.1%.

Stock futures in the U.S. were indicating a higher open for the markets Friday. Futures on the

S&P 500

rose 5.60 points to 1130, and were 11.80 points above fair value. Nasdaq futures rose 6.50 points to 1517, and were 14.89 points above fair value.