 "Asian stock markets fall, dollar near two-year low vs euro")
Those expectations were tempered, however, by continued worries over tighter cash markets in China, leading to a lopsided and selective rally in Asian markets.
The Nikkei share average's 2% drop was also set to pressure European markets on Friday, financial bookmakers predicted.
Financial spreadbetters were forecasting falls in Germany and France as the region's equity indexes pause for breath after hitting fresh highs this week. They expected Britain's FTSE 100 to open almost unchanged but Germany's DAX was seen opening down by as much as 0.3% while France's CAC 40 was seen falling 0.4%.
In Asia, the Indonesian rupiah rallied nearly 2% against the weak dollar, but the Aussie was on the back foot. Aussie shares rose 0.3%, ending near the 5-year high of 5,402.4 hit earlier in the week.
Meanwhile, South Korean stock markets fell as investors braced for some profit-taking in a market that has seen record foreign buying for 40 consecutive sessions and has pushed the won to a two-year high this week.
The KOSPI index was down 0.8% even after Samsung Electronics Co Ltd, the index's largest component, said its quarterly operating profit surged 26% to a new record.
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"A combination of foreign outflows and shadows of China liquidity concerns are dragging on the market," said Lee Kyung-soo, an analyst at Shinyoung Securities.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.35%, reversing earlier slight gains. The index fell 0.1% on Thursday as rising Chinese money market rates countered signs of a pick-up in manufacturing.
Shanghai shares hit their lowest levels in a month, while Tokyo's stock market was set to suffer its first weekly drop in three weeks.
Although the Japanese quarterly earnings season is still at an early stage, 70% of the 10 Nikkei companies that have reported so far have missed market expectations, according to Thomson Reuters StarMine. That compared with 42% in the previous quarter.
US S&P E-mini futures were flat in early trade. The S&P 500 index had advanced 0.3% on solid earnings and expectations that monetary stimulus will be in place for the foreseeable future after weak data.
US manufacturing output fell for the first time in four years and the number of new claims for unemployment benefits fell less than expected last week.
DOLLAR WEAKNESS
The euro was up 0.1% $1.3815, not far from a two-year high of $1.3826 touched on Thursday and shrugging off data showing the pace of growth in euro zone business unexpectedly eased this month.
"The dollar will not rally without Fed tapering expectations rising again, but we would not chase EUR/USD higher here, as rate compression suggests the pair is unlikely to break much higher," Societe Generale analysts wrote in a note, saying they favoured Scandinavian and Antipodean currencies into year-end.
"Fed tapering expectations being pushed out into 2014 and further ECB easing early next year suggest a favourable policy environment for the FX carry trade. Throw in lower volatility and seasonality effects, and one has the perfect cocktail for the carry trade."
Yet the Antipodeans, the Aussie and New Zealand dollars, were nursing broad losses too as investors quit extended long positions in the two currencies.
The Aussie was settling around $0.9605, after touching a low of $0.9582. It had hit a 4-1/2-month peak of $0.9758 on Wednesday, but is on track for a loss of close to 1% for the week.
The kiwi was holding just above a 10-day low at $0.8310. It had also peaked during the week at a multi-month high, but now faces a weekly loss of more than 2%.
Against the yen, the dollar stood at 97.09, a shade off the two-week low of 97.15 yen hit on Wednesday.
The dollar index, which tracks a basket of major currencies, was little changed.
Gold paused for breath after climbing 1.1% on Thursday, while US crude prices added 0.3% to about $97.35 a barrel, moving away from a 3-1/2 month low of $95.95 touched in the previous session.