The final Markit/Nikkei manufacturing Purchasing Managers' Index (PMI) for Japan declined to 49.1 in March from 50.1 in February, in line with the preliminary reading.

A reading above 50 indicates expansion, a reading below 50 indicates contraction of activity.

The index was driven by drops in output and in new orders. New export orders slid at the fastest rate since January 2013.

"Manufacturing conditions in Japan worsened at the end of the first quarter of 2016. Both production and new orders contracted, with total incoming work declining at the sharpest rate in nearly two years," economist at Markit, Amy Brownbill, said.