Asian shares struggled on Friday in holiday-thinned trade, with investors awaiting key U.S. jobs data later in the day and fretting about rising yields in weaker euro zone economies that are reviving concerns about the region's debt crisis.
MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS fell in early trade for a third straight session, before inching up 0.1 percent.
The index hit a four-week low on Thursday and is set to end the first week of the second quarter virtually flat, though it has gained nearly 12 percent in the year-to-date.
Japan's Nikkei average .N225 ended down 0.8 percent, posting its worst weekly loss in eight months. .T
Most global markets including those in Europe and the United States will be closed for the Good Friday holiday, though U.S. non-farm payroll data will still be released (8:30 a.m. EST).
Worries about Spain's rising bond yields were offset somewhat by fresh U.S. data on Thursday that provided more evidence of a recovering labor market, raising prospects that the payroll report would be solid.
A slew of data due next week from China, the world's second largest economy after the United States, also deterred investors from taking fresh positions. Any signs of a sharper-than-expected slowdown could further undermine sentiment.
The data from China will be the key measuring stick on how confidence will hold up, said Yoon So-jung, an analyst at Shinyoung Securities.
China's cut in growth rate forecasts was the most notable source of drag on the index last month, and investors will want to see how the numbers compare.
China is set to release the first-quarter gross domestic product, inflation figures and trade balance, among others.
The very optimistic view of the U.S. economy has already been priced in ... On the other hand, we see uncertainty in the European debt crisis, said Ryota Sakagami, chief equity research strategist at SMBC Nikko Securities.
Government bond yields of highly indebted Italy and Spain rose further on Thursday, boosting investors' safe-haven appetite for U.S. Treasuries and German Bunds, as well as gold.
Gold was broadly steady at $1,630 an ounce in thin trade on Friday but was headed for a weekly decline of more than 2 percent. Bullion hit a near three-month low of $1,611.80 this week, as investors were disappointed by the diminishing prospects of monetary stimulus in the United States.
The euro also steadied at $1.3070 after hitting a three-week low of $1.3035 on Thursday, and was poised to post its worst week in nearly four months, while the dollar index .DXY, measured against key currencies, held near its highest in three weeks. It closed above 80 on Thursday for the first time in three weeks.
Thursday's data showed U.S. jobless claims fell to the lowest level since April 2008, more positive news following a report on private-sector jobs earlier this week, boding well for the widely watched monthly employment figures due on Friday.
According to a Reuters survey, the U.S. economy likely recorded a fourth month of solid job growth in March, adding 203,000 jobs, after non-farm payrolls rose 227,000 in February. A solid report could further reduce the need of additional monetary measures to spur faster economic growth.
FX markets may be ready to grant a win-win positioning to the US dollar ahead of Friday's U.S. jobs report, said Ashraf Laidi, chief global strategist at City Index Group.
A neutral-to-strong reading would reduce the case for outright asset purchases (by the U.S. Federal Reserve), while a disappointing figure may not be sufficiently detrimental to invalidate the recent data strength upon which rising yields had rested, he said.
The dollar index closing at 81.00 suggested a clear bullish trend, followed by a breach of the 81.80 January high, and only a fall below 78.80 would signal fresh losses, he said.
In contrast to the U.S. outlook, reports on Thursday showed German industrial output fell more than expected in February and British factory output suffered its biggest monthly fall in almost a year.
Oil rose on Thursday after two straight days of losses on firm U.S. data and fears of Iran-related supply disruptions. Brent crude futures climbed 0.89 percent to settle at $123.43 a barrel and U.S. crude jumped 1.81 percent to settle at $103.31.