Tokyo's benchmark Nikkei index fell 0.90 percent, or 79.55 points, to 8,757.60
Asian markets fell on Friday, extending their losses from the previous day as fears the United States is headed for another economic crisis sent Wall Street diving again and dealers running.
The yen remained elevated after Barack Obama's re-election as US president stoked concerns of political gridlock in Washington with a "fiscal cliff" approaching that could tip the country back into recession.
But Chinese data showing inflation at a new three-year low provided some hope, giving authorities more room to loosen monetary policy, while industrial output figures also pointed to a pick-up in the economy.
Tokyo fell 0.90 percent, or 79.55 points, to 8,757.60, Sydney fell 0.49 percent, or 21.8 points, to 4,462.0, while Seoul shed 0.52 percent, or 10.00 points, to 1,904.41.
Hong Kong lost 0.85 percent, or 182.53 points, to 21,384.38.
Shanghai ended down 0.12 percent, or 2.44 points, at 2,069.07, although it was well off its earlier lows thanks to the upbeat economic figures indicating China could be emerging from its growth slowdown.
While Obama's victory over Mitt Romney removed uncertainty, traders have now turned their focus to the deep spending cuts and huge tax hikes that will come into force on January 1 if Republicans and Democrats do not reach a deal.
The package is a major threat to the economy after a protracted but possibly reckless compromise was reached last year -- with the expectation a less painful plan could be agreed -- to raise the country's borrowing cap.
If the automatic measures kick in, the United States' slow recovery from the financial crisis could be reversed and the nation tip back into recession, dealing a blow to the global economy.
The threat of a fiscal crisis sent Wall Street tumbling for a second day Thursday.
The Dow, which suffered its worst one-day drop of the year on Wednesday, lost another 0.94 percent, the S&P 500 fell 1.22 percent and the Nasdaq lost 1.42 percent.
However, US dealers were provided another set of upbeat data that indicate the world's biggest economy is picking up.
The commerce department said the country's trade deficit narrowed in September to $41.5 billion, from $43.8 billion in August, thanks to a rebound in exports to a record level for the month.
Expectations had been for the trade deficit to widen to $45.4 billion.
With optimism weakening investors sought out safer assets in the forex market.
In early European trade the single currency fetched $1.2750 and 101.12 yen, from $1.2748 and 101.27 yen in New York late Thursday. The dollar was at 79.33 yen against 79.43 yen in New York.
In comparison the euro bought $1.2932 and 103.77 yen last Friday, while the dollar was at 80.21 yen.
The euro was also weak after the European Central Bank said it would keep interest rates on hold, refusing to announce any cut and saying it was up to governments to work on getting the region's finances back on a level footing.
Regional finance ministers are due to decide whether to release the latest tranche of rescue cash for Greece, which on Thursday posted a record unemployment level of 25.4 percent of the workforce.
European Central Bank President Mario Draghi welcomed a sweeping austerity package passed by Greek lawmakers on Wednesday to qualify for the money, saying it "really represents progress".
Investors are also keeping an eye on China where a week-long congress is underway at which the country's next leaders will be anointed.
On Friday official data showed Chinese inflation eased in October to 1.7 percent year-on-year, compared with 1.9 percent in September. The latest result represents the lowest level since January 2010.
Dealers saw the figures as providing the central bank more leeway to cut interest rates to spur the economy, which is showing signs of breaking out of a recent slumber.
Also Friday China said industrial output rose a better-than-forecast 9.6 percent year on year in October, while government investment surged 20 percent in the first 10 months of 2012.
Oil prices were lower, with New York's main contract, light sweet crude for delivery in December down 17 cents to $84.92 a barrel in the afternoon while Brent North Sea crude for December fell 25 cents to $107.00.
Gold was at $1,730.30 by 1100 GMT compared with $1,714.90 late Thursday.
In other markets:
-- Singapore closed flat, dipping 2.69 points to 3,009.56.
Wilmar International added 1.60 percent to Sg$3.17 while Sembcorp Industries fell 0.99 percent to Sg$4.99.
-- Taipei rose 0.70 percent, or 50.59 points, to 7,293.22.
Hon Hai Precision rose 0.55 percent to Tw$91.4 while TSMC was 0.33 percent higher at Tw$90.8.
-- Manila rose 0.40 percent, or 22.08 points, to 5,468.79.
Philippine Long Distance Telephone was up 1.94 percent at 2,630 pesos, International Container Terminal Services ended 0.86 percent higher at 70 pesos and Metropolitan Bank and Trust lost 0.57 percent to 96.55 pesos.
-- Wellington ended flat, edging up 2.67 points to 3,957.92.
Telecom rose 1.26 percent to NZ$2.41, Fletcher Building slipped 1.36 percent to NZ$7.24 and Trade Me was unchanged on NZ$4.07.
-- Kuala Lumpur shares closed flat, nudging down 0.01 point to 1,641.08.
YTL Power shed 1.9 percent to 1.57 ringgit, Maxis lost 0.7 percent to 6.67 while gaming firm Genting gained 1.5 percent to 9.40.
-- Bangkok fell 0.22 percent, or 2.87 points, to 1,290.83.
Oil company PTT dropped 0.32 percent to 316.00 baht, while Siam Cement gained 0.78 percent to 387.00 baht.
-- Jakarta ended 0.13 percent, or 5.77 ponits, higher at 4,333.64.
-- Mumbai fell 0.86 percent or 162.58 points at 18,683.68 points.
State Bank of India fell 3.89 percent to 2,156.35 rupees while Tata Steel fell 3.25 percent to 390.55 rupees.