On June 1, Japan's Nikkei average slid to mark its ninth straight week of losses that is the longest such run in two decades. This was after disappointing Chinese and U.S. data deepened fears of a global slowdown in the throes of the debt crisis of Europe.

"The problem is that although Japanese stocks are technically cheap according to historical barometers, the market has always moved more on foreign factors than domestic ones," said Yutaka Miura, senior technical analyst at Mizuho Securities.

On the week, the Nikkei fell 1.2 and was down 1.6 percent and on Thursday it logged a drop of 10.3 percent in May that is its worst monthly performance in two years.

"Many investors are watching the timing to enter the market. However, as long as the knife is falling, nobody can catch it," said Ryota Sakagami, chief strategist in equity research at SMBC Nikko Securities.

"The current problem is the tail risk from Europe ... However, (it's) different from last year," he said.

"We've got a couple of weeks to go for short-covering to come in, but the more important factor is the banking system," said Eiji Kinouchi, chief technical analyst at Daiwa Capital Markets.

"When banks in Spain and the rest of Europe achieve their deleveraging targets this month or in July we should see lending grow, which will have a positive knock-on effect on the global economy."