China's Shanghai Composite index crashed more than 7 percent on Friday amid increasing worries that the country's bull run is running out of steam. Risk-off sentiment from the mainland also cast a shadow on regional bourses, which mostly ended in negative territory. "Reasons for the slump in China stretch far and wide, including deleveraging, frothy valuations and extreme volatility causing nervousness. While some markets in the region seem to have ignored some of the wild swings in China for a while, it's now certainly casting a shadow on some key markets," IG's market strategist Stan Shamu wrote in a note. Dwindling hopes of a Greek deal also weighed on sentiment, as the Eurogroup meeting of finance ministers quickly ended without any signs of an agreement on Thursday. German chancellor Angela Merkel said a euro zone finance ministers' meeting over the weekend would be decisive for finding a solution to Greece's debt crisis. Overnight, U.S. equities finished a quiet session with modest losses, as a lack of resolution between Greece and its foreign creditors kept traders on the sidelines. The Dow Jones Industrial Average and S&P 500 shed 0.4 and 0.3 percent, respectively, while the tech-heavy Nasdaq slipped 0.2 percent.



Mainland markets in free fall The Shanghai bourse accelerated its pace of decline in the afternoon session, extending Thursday's violent sell-off precipitated by increasing signs of deleveraging and persisting concerns over a flood of new-share listings. The benchmark Shanghai Composite plunged 7.38 percent - marking its worst single-day loss since January 19 - to its lowest level since May 8. For the week, the bourse eased 9.58 percent. The blue-chip CSI 300 index plummeted 7.8 percent to a more than two-month trough, while the smaller Shenzhen Composite retreated by the same margin to close at its lowest level since May 19. The start-up ChiNext board was the hardest-hit, diving 8.4 percent to settle at a more than one-month low.

The unwinding of bets by leveraged investors appear set to be one of the key risks that is deflating China's world-beating rallly. According to figures provided by IG, the margin debt level has fallen 4 percent since June 18. With margin lending being a key driver of the mainland's stock market, a sudden shift in sentiment among margin traders could put the brakes on the blistering run-up, analysts warned. Read MoreWhy Chinese stocks could slide 50 percent

Some experts have also issued bubble warnings. "After being the worst performing stock market for 6 years, the domestic A-share market caught up with a vengeance [but] a rise of 150 percent in a short period of time is excessive by any standard of imagination," Stephen Roach, senior fellow at Yale University, told CNBC Asia's "Squawk Box." "Even though the market is not terribly overvalued in a forward PE basis, the rate of acceleration is a classic bubble and some of that is coming off right now," Roach added. By contrast, Guotai Junan Securities — China's third-largest brokerage by profits — leaped 44 percent on its market debut in Shanghai. The listing follows an initial public offering (IPO) which raised 30.1 billion yuan ($4.85 billion) and will be China's largest IPO since 2010. In Hong Kong, the Hang Seng index tracked weakness in its mainland peers to close down 1.8 percent.