Japan's Nikkei average hit a four-month low on Thursday with Mitsubishi UFJ Financial Group sinking after announcing a massive fundraising, taking other banks down with it.

MUFG, Japan's biggest bank, fell over 3 percent after saying on Wednesday it would raise $11 billion to meet stricter capital rules, the latest in a wave of fundraising that has seen Japanese companies already raise $40 billion through issuing common stock and convertible bonds this year. "The level of this fundraising is a bit big for the market at this point and raises questions about timing. Why not next year, when the economy's supposed to be better?" said Kenichi Hirano at Tachibana Securities.

"The fact that they're doing this now suggests that company management doesn't believe the economy will improve, and this is hitting the confidence of individual investors."

In active trade, the benchmark Nikkei lost 1 percent to 9,584.01 after falling as far as 9,530.65, a loss of 1.5 percent and its lowest since late July. The broader Topix fell 1.4 percent to a six-month low.

Market players said the next support point for the Nikkei is 9,500, a key psychological level. That would be followed by 9,300 at roughly the Nikkei's 200-day moving average. Japan Airlines Corp rose 1 percent to 99 yen a day after falling to a record low 94 yen.

Delta Air Lines Inc said on Wednesday that it and partners in the SkyTeam alliance are prepared to offer struggling carrier Japan Airlines a support package totalling $1 billion in investment, revenue guarantees and financing.