Japanese stocks fell on Friday in a session that turned volatile after the Bank of Japan announced it would maintain its massive stimulus programme's base money target, while expanding the types of asset it purchases.
In the minutes after the BOJ announcement, the Nikkei share average rose as much as 2.7 per cent, then plunged back into the red once investors realised it amounted to less of an expansion than initially thought.
By the session's end, the benchmark index was down 1.9 per cent to 18,986.80, and had lost 1.3 per cent for the week.
Masashi Oda, senior investment officer at Sumitomo Mitsui Trust Bank, said that because "most people had expected no news from the central bank, the market seemed to have reacted to headlines saying that the central bank is 'expanding' asset purchases."
He said sentiment turned when it became apparent the expansion would have a limited effect on the market.
In a split vote, the BOJ set up a programme buying exchange-traded funds at an annual pace of 300 billion yen ($2.45 billion) and said it would extend the average maturity of the bank's government bonds to 7-12 years from the beginning of next year.
"This is an expansion but its efficacy is somewhat debatable," said Martin King, co-managing director at Tyton Capital Advisors.
The BOJ said it would target for its ETF stock purchases firms that are investing in physical and human capital, a move that market players said was aimed at encouraging companies to raise wages and increase capital expenditure.
The Nikkei extended its losses late in the day's session as market participants came to see the BOJ's announcement as a signal further easing may not be on the horizon for some time.
"It soured investor sentiment and gave them a reason to take profits from gains posted in the past two days," said Takuya Takahashi, a strategist at Daiwa Securities.
The broader Topix fell 1.8 per cent to 1,537.10, with about 3.0 billion shares changing hands, the biggest level since late August. It ended the week down by 0.8 per cent.
The JPX-Nikkei Index 400 fell 1.9 per cent to 13,833.27. ($1 = 122.2000 yen)