Japanese stocks fell Friday after a three-day advance, as investors took profits in real estate and exporter shares.The Nikkei 225 average declined 127.81 points, or 0.73 percent, to 17,331.17 points on the Tokyo Stock Exchange. The index has gained 2.3 percent over the previous three days, including Thursday's gain of 1.64 percent. Traders said the Tokyo market's direction depends on how U.S. markets move as there isn't much domestic market-moving news until earnings reports begin in earnest later this month.

"Earnings results from U.S. major chip companies such as Intel, IBM and Google may affect Japanese tech stocks next week," said Hiroyuki Fukunaga, chief strategist at Rakuten Securities.

Friday's losers included Mitsubishi Estate Co., which shed 2.3 percent at 3,420 yen. Banks also dropped after Lehman Brothers cut price target on major Japanese banks. Sumitomo Mitsui Financial Group Inc. lost 2.7 percent at 927,000 yen.

The broader Topix index, which includes all Tokyo Stock Exchange's first section issues, fell 18.04 points, or 1.08 percent, to 1,659.48 points.

In currency dealings, the U.S. dollar was trading at 117.16 yen midafternoon, down from 117.21 yen late Thursday in New York. The euro rose to $1.4194 to $1.4188.