Asian shares dropped after a massive earthquake hit Japan, violently shaking the capital Tokyo, darkening an already bleak mood caused by weak economic data and unrest in Saudi Arabia.

The quake struck just before the close of Tokyo stock trading. Japan's Nikkei average <.N225> closed at an intraday and five-week low, down 1.7 percent on the day.

Hong Kong's Hang Seng share index <.HSI> was down 1.8 percent, and Nikkei futures in Singapore tumbled more than 3 percent. At 0650 GMT, Nikkei June futures were down 2.8 percent at 10,075, though they later rebounded and investors expected the broad fall would not be prolonged.

Japanese stocks will probably fall on Monday, especially of those companies that have factories in the affected areas, but on the whole the sell-off will likely be short-lived, said Mitsuhsige Akino, a fund manager at Ichiyoshi Investment Management, after the market closed on Friday.

European stock index futures indicated a lower opening. Futures for the Euro STOXX 50, Germany's DAX and France's CAC were down 0.7 to 0.8 percent.

The magnitude 8.9 quake shook buildings in Tokyo, causing many injuries and triggered a four-meter (13-ft) tsunami, NHK television and witnesses reported.

The yen extended losses against the dollar after the quake, falling to 83.29 yen to the dollar compared with 82.80 before it struck.

Japanese government bond futures surged, briefly rising more than a full point after the quake struck, while trading in cash bonds was suspended.

This will certainly lead the government to compile an emergency budget, said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo. The government would have to sell more bonds, but this is an emergency, so this can't be avoided.

Brent crude held near $115 per barrel as investors monitored developments in the Middle East. Forces loyal to Libyan leader Muammar Gaddafi battled rebels at an oil port, while Saudi police fired in the air to disperse protesting Shi'ites.

Oil prices are up by a quarter this year, with most of the gains coming since the Libyan crisis erupted.

While oil prices around this level posed no substantial threats to the world economy or financial markets, the risk that prices may rise to damaging levels has risen substantially, Barclays Capital strategists said.

Chinese inflation in February remained close to 5 percent, suggesting tighter monetary policy may be needed, adding to the uncertainty.

Weak U.S. economic data spurred some profit taking in shares in developed markets which have enjoyed a handsome run this year, though some bargain buying checked losses.

RISK REDUCTION

Overnight, a weak Wall Street which ended down nearly 2 percent. The S&P 500 <.SPX> is up by a third since last July. <.N>

It is another day of reducing risk across the portfolio. We have had it one way for too long and with big issues hitting, everyone is running to the exit at the same time, Chris Weston, an institutional dealer at IG Markets said.

In credit markets, sovereign credit default swap spreads pushed wider, reflecting the general risk aversion sentiment.

London copper futures reversed early gains after the Japanese quake hit. Dragged by worries of high oil prices hurting the global economy, the metal was headed for its worst week since last June.

The yield on benchmark 10-year notes slipped to 3.36 percent, down from 3.56 percent hit earlier this month.

In currency markets, the euro stayed weak after having suffered its biggest one-day fall against the dollar in a month, and further losses may loom if a euro zone summit fails to soothe market nerves on sovereign debt.

Any disappointment could heap more pressure on the single currency, which slid to one-week lows near $1.3770 overnight. It last traded at $1.3810.

(Additional reporting by Antoni Slodkowski and Nathan Layne in Tokyo, Narayanan Somasundaram in Sydney and Jonathan Rogers at IFR; Editing by Daniel Magnowski and Richard Borsuk)