Shares of JAL tumbled to a record low on growing investor worries that the carrier will be restructured in a bankruptcy court as part of a state bailout.
European shares were seen opening down, with Britain's FTSE 100 <.FTSE> expected to start as much as 0.2 percent lower, financial bookmakers said.
Overall, my impression is that there's probably a bit of profit-taking going on ahead of the year-end, particularly with U.S. indicators coming up next week, said Hideyuki Ishiguro, a strategist at Okasan Securities in Tokyo.
Given recent gains, it's not surprising for most markets to take a bit of a breather today.
On the final trading day of the year, Japan's Nikkei average <.N225> fell 0.9 percent, but gained 19 percent in 2009 after falling 42 percent in 2008, which was the biggest loss in its 58-year history.
High-tech exporters led gains while banks lagged, hurt by fears about equity financing as well as JAL's woes.
The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> fell 0.2 percent, edging further from its 2009 high set in November but still up nearly 66 percent on the year.
Corporate debt problems also hit shares in South Korea, where the benchmark index <.KS11> initially fell, led down by companies in the Kumho Asiana Group following reports that flagship units of South Korea's ninth-biggest business group could be put under creditor-led debt restructuring.
Shares in Kumho Tire <073240.KS> and Kumho Industrial <002990.KS> both plunged by their daily limit of 15 percent but the benchmark edged up 0.6 percent to cap the year with gains of 50 percent.
Investors will take a very conservative approach on Kumho Asiana Group companies until some of the uncertainties are resolved, said Yoon Jin-il, an analyst at IBK Securities.
Many analysts expect stocks to rise further in 2010 as the global economy continues to mend, but gains are likely to be at a much slower pace.
Australian stocks rose to their highest in nearly 10 weeks early in the day but quickly retreated to fall 0.2 percent, snapping a four-day rally, as energy and metals stocks fell in step with commodities prices <.AXJO>.
U.S. stocks slipped overnight, breaking a six-day string of gains. Data showing a rise in consumer confidence was offset by a housing report pointing to more bumps in the road to a sustained economic recovery. <.N>
The dollar hit a two-month high at 92.26 yen, keeping the firmer tone it has developed recently on shifting sentiment about the outlook for U.S. interest rates. It was later trading at 91.99, up 0.5 percent.
The main question for the currency market going into 2010 is when the Federal Reserve will start to tighten policy.
Improved U.S. data in the past month has prompted many market watchers to review their forecasts for when rates might start to rise, lifting the dollar up from a 14-year low against the yen and reviving its fortunes against other major currencies.
The market is shifting its focus to the recently emerged theme of whether the Fed exit strategy will be sooner than expected. And it will closely scrutinize upcoming U.S. economic data, said Kazuyuki Takami, senior manager at the foreign exchange trading department at Bank of Tokyo-Mitsubishi UFJ.
The euro fell 0.1 percent to $1.4344.
Oil held steady below $80, weighed down by the dollar's gains and doubts whether predictions for a weekly fall in government-monitored U.S. crude stockpiles will come true, after a private-sector report showed an unexpected rise. U.S. crude for February delivery stood just above $79 a barrel.
Gold stood at $1,095.75 per ounce, after snapping a three-session winning streak the day before when the dollar's rise curbed its appeal as a currency alternative.
Spot gold had tumbled to a seven-week low of $1,074.10 an ounce last week before the holiday break.
(Additional reporting by Jungyoun Park in SEOUL, and Charlotte Cooper in TOKYO; Editing by Jan Dahinten)