Asian shares fell and commodity-linked currencies such as the Australian dollar slipped on Friday after disappointing US economic data stirred doubts about the strength of the recovery.
Renewed worries on the euro zone debt crisis also kept riskier assets under pressure, as a better-than-feared Spanish bond auction failed to allay concerns that Spain may follow Greece, Ireland and Portugal in needing an international bailout.
MSCI's broadest index of Asia Pacific shares outside Japan and Japan's Nikkei share average both lost 0.5%.
"Spain is still a worry and French bond yields are back up, so the hope that the Nikkei might hit 10,000 again has pretty much vanished," said Yoshihiko Tabei, chief analyst at Kazaka Securities Co Ltd in Tokyo.
Wall Street stocks fell 0.6% on Thursday, as worries about the health of the wider economy overshadowed a strong start to the corporate earnings season from the likes of Bank of America and Morgan Stanley.
The number of Americans claiming unemployment benefit for the first time fell less than expected last week, suggesting a slowdown in job creation. Other data showed factory activity in the Mid-Atlantic region slowed sharply this month and US home resales fell for a second month in March.
Commodity markets were steady, with Brent crude little changed around $118 a barrel, copper also flat around $8,040 a tonne and gold easing a touch to around $1,641 an ounce.
But currencies of commodity producers, which tend to be sensitive to economic growth expectations, were in retreat, with the Australian dollar easing about 0.2% to $1.0315.
Euro unscathed
The dollar bought around 81.65 yen, having hit a 1-1/2-week high of 81.74, and the euro rose as high as 107.35 yen after Bank of Japan Governor Masaaki Shirakawa reiterated on Thursday that the central bank was ready to take further monetary easing action to support the economy.
The euro emerged unscathed from a choppy session on Thursday to trade around $1.3135, almost unchanged on the day.
It hit a high of $1.3166 following the Spanish bond sale but then dropped on rumours, later denied, of a possible French rating downgrade.
Spain has emerged as the latest source of concern for investors in recent weeks, as long-standing fears about the balance sheets of domestic banks following a property bust have combined with worries about the country's fiscal health in the face of a harsh austerity programme and weakening economy.
Madrid sold 2.5 billion euros in 2- and 10-year bonds, at the top end of the targeted amount. But yields on the key 10-year bond were higher, reflecting fears that it may miss budget deficit targets.
"Now, with the G20 convening in Washington, much attention will be drawn to how and where the International Monetary Fund draws up additional funding from in order to further beef up Europe's bailout funds," said Christopher Vecchio, analyst at DailyFX.
"Should the G20 decide that the IMF's funding capacity is adequate ... I expect the European and commodity currencies to depreciate against the yen and US dollar over the coming sessions."
