A report was revealed on Friday which states that capital requirements for European banks may be relaxed which bring Nikkei at a position to remain flat and cut its losses.

Draft legislation has implemented new globally agreed standards across the 27-member bloc under which banks under the European Union could avoid part of the tighter Basel III capital requirements, according to the Financial Times report.

After the report, Japanese banks shares rose with Mitsubishi UFJ Financial Group (8306. T) rising 1.3 percent to 379 yen and Sumitomo Mitsui Financial Group (8316. T) gaining 1.3 percent to 2,373 yen.

Financial institutions have been asked to help the nuclear operator Tepco fund compensation which is in trouble, recommended by Chief Cabinet Secretary Yukio Edano on May 13.

The Nikkei .N225 was down 0.2 percent at 9,543.74.