By Saikat Chatterjee
HONG KONG (Reuters) - Asian stocks deepened losses and the Japanese yen strengthened against the greenback on Friday as investors dumped riskier assets and fled to safe havens after four police officers were killed and others wounded in the United States.
Snipers opened fire on police during rallies in Dallas to protest against the fatal shooting of two black men this week.
U.S. stock futures dipped 0.2 percent, and European markets were set to open flat to lower.
Markets had already been on edge after a steady stream of negative news this week in the form of rising Brexit uncertainty and a growing crisis in Italian banks. Investment managers sought shelter in the U.S. dollar, Treasuries and gold, signaling a rocky start to the second half of the year.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.6 percent. For the week, it is set to fall 1 percent, its biggest weekly drop since June. 19. Hong Kong stocks led losers with a fall of 1 percent.
Japan's Nikkei fell 0.9 percent.
"The market is not in a mood to chase bids higher. It is still unclear how the situation for (Italian bank) Monte Paschi plays out, and moreover, there is the U.S. jobs data to digest,"
said Soichiro Monji, chief strategist at Daiwa SB Investments.
U.S.-based funds invested in precious metals attracted the most money since February, adding $2 billion to these funds in the latest week, according to Thomson Reuters' Lipper data.
With the European economy threatened by Britain's decision to leave the European Union, investors are counting on the resilience of the U.S. economy to support global growth.
Ahead of the closely-followed U.S. payrolls report later on Friday, U.S. data published on Thursday was mostly positive.
U.S. private payrolls increased more than expected in June as small businesses ramped up hiring, and fewer Americans applied for unemployment benefits last week.
The consensus forecast for Friday's non-farm payrolls data is for 175,000 jobs gain for June, according to a Reuters poll, but investors remained wary given the unexpected negative surprise in payrolls the previous month.
"I would say numbers around the consensus figure will be the most comfortable for markets," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
"Anything below 100,000 will scare investors while reading above 200,000 could rekindle talk of a Fed rate hike even though I suspect people would not seriously expect the Fed to raise rates soon."
Though strong payrolls data would spark fresh speculation of a U.S. rate increase later this year, it would also trigger a fresh round of currency weakness and likely policy tightening in emerging markets.
The British pound was steady for now at $1.2945, but it still stood just about a cent above its 31-year low of $1.2798 touched on Wednesday.
Having slipped 2.8 percent so far this week, it looks set to post its third straight week of losses.
The euro eased to $1.10775, having shed 0.3 percent on Thursday, not far from this week's low of $1.1029 set on Wednesday.
The yen was broadly flat on Thursday to 100.51 yen per dollar, coming within sight of retesting Wednesday's high of 100.20, as the Japanese currency is seen as a safe-haven at times of distress.
U.S. bond prices retreated a bit on profit-taking after the 10-year yield hit a record low of 1.321 percent earlier this week. It last stood at 1.385 percent. Meanwhile, Japanese bond yields plunged to fresh record lows.
Still, analysts expect U.S. bonds to continue luring investors' funds escaping Europe.
Oil prices fell 5 percent to two-month lows on Thursday after the U.S. government reported a weekly crude draw within analysts' forecasts that disappointed market bulls expecting larger declines.
Brent crude futures hit a two-month low of $46.15 per barrel on Thursday and last traded at $46.88.
Spot gold edged down on Friday but is set for its sixth consecutive weekly gain.
(Additional reporting by Hideyuki Sano in TOKYO; Editing by Shri Navaratnam and Kim Coghill)
