Asian markets fell Friday on increasing concerns about China’s economic slowdown and Greece exiting the euro zone.

The Chinese Shanghai composite index dropped 0.40 percent or 9.43 points to 2341.54, and Hong Kong's Hang Seng declined 0.30 percent, or 56.55 points, to 18609.85. India’s BSE Sensex fell 0.32 percent, or 51.76 points, to 16,170.54, while Japan's Nikkei Stock Average remained nearly flat at 8563.60, and South Korea's KOSPI rose 0.28 percent, or 5.12 points, to 1819.59.

Market sentiment continued to be negative as Bloomberg reported that China’s biggest banks will miss the loan target for the first time in seven years. Earlier this month China’s government loosened credit conditions to protect the country from the global economic downturn. China cut banks' cash reserves ratio by 50 basis points in a bid to spur lending to small businesses. However, the banks will only lend if there is a demand for credit. Weak lending figures for April suggest this is no longer assured.

There have been fears of a hard landing after data showed earlier last month that China's economy slowed down to 8.1 percent in the first quarter, down from 8.9 percent in the fourth quarter of 2011.

Another factor that dragged down Asian market sentiment was the inability of European national leaders to announce any major progress in tackling the debt crisis looming over the euro zone and preventing Greece from leaving the euro bloc.

There are concerns that parties opposing austerity measures in Greece will gain a majority when the country holds fresh elections on June 17. If that happens, Greece will not receive a bailout package, which would cause its banking system to collapse, leading to its exit from the euro zone.

Also, there are disagreements among euro zone countries on tackling the debt crisis situation. Germany and France have already brought out their differences in dealing with the economic situation. While Germany is for austerity measures, the new French government wants them to be replaced by pro-growth policies.