Markets ended mixed in Asia, with losses late in the week erasing an earlier rally. Hong Kong's market was little changed from a week ago, and market analysts say deflation keeps investors wary of the equity market.

Japan's Nikkei 225 average shed nearly 4 percent over the week. On Friday, however, it gained more than 1 percent from Thursday's close.

Analysts say Friday's gains came as investors returned to financial stocks on news the government could take a softer approach to bank reform. The prime minister is facing pressure to spend more public money to bail out banks struggling with huge amounts of non-performing loans. The Nikkei ended at 8,726 points.

Hong Kong's Hang Seng Index was virtually unchanged, closing at 9,688, up just 5 points from a week ago.

Markus Rosgen, the chief regional analysts of ING Asia, said Hong Kong price deflation is scaring retail investors away from the market; they prefer to keep their money in savings accounts. "Retail investors, so far, have still shied away from investing in equity markets," he said. "Especially here in Hong Kong, if you look at the size of bank deposits relative to GDP, then bank deposits are two-and-a-half times larger than total GDP for Hong Kong, and this number is now at an all time high."

Taipei's Taiex gained 2.3 percent over the week, ending at 4,564 Friday. Mr. Rosgen said investors there were buying on the assumption that many technology shares have already bottomed out.

Korea's Kospi index lost 2.2 percent this week, ending Friday at 655. However, computer chip companies rallied at the end of the week, because of rising prices for chips. Samsung Electronics gained almost 2 percent Friday.