MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS? was down 0.3 percent, after falling to its lowest in nearly four months on Thursday while Japan's Nikkei share average <.N225> opened up 0.1 percent.
U.S. stock index futures fell sharply on Thursday evening as JPMorgan Chase & Co (JPM.N) stunned investors with news that its chief investment office had incurred significant mark-to-market losses that it said could easily get worse, sending the stock down nearly 7 percent to $38.05 in after-hours trading.
Prior to the JPMorgan's announcement, European and U.S. stocks rose after data showed U.S. claims for unemployment benefits edged lower last week, soothing concerns that dismal employment growth in April pointed to worsening labor conditions.
Risk appetite will remain muted largely due to heightening political and policy uncertainty in the euro zone.
We expect the EUR to remain under pressure as a result, especially as the market debate regarding the use of the EUR as a policy tool gains momentum, suggesting that a rate cut aimed at weakening the euro is likely, Morgan Stanley said in a note.
As central banks focus more on growth than inflation, real yield differentials will be more significant in dictating forex market direction, especially for the euro/dollar, it said.
Uncertainty may drive currency market volatility, pegged at historically low levels by aggressive central bank liquidity injections globally, to pick up and prompt an unwinding of carry trades, with the dollar and the yen gaining, it added.
The euro was steady around $1.2931, still within sight of $1.29115 hit on Wednesday, its lowest since Jan. 23.
Investors will also be cautious ahead of data due from China later in the session, seeking clues over the extent of growth slowdown after it posted weaker-than-forecast April trade figures the day before.
Chinese inflation data are due at 0130 GMT while industrial output and retail sales are due for release at 0530 GMT.
The Australian dollar, which is highly sensitive to growth prospects in China, its single biggest export market, also steadied around $1.0060 but near $1.0021 touched on Wednesday, its lowest since Dec. 20.
Chinese trade data yesterday suggested slowdown in trade. So this time around the focus will be more on growth-related data such as output and investment rather than CPI, said Masayuki Doshida, senior market analyst at Rakuten Securities.
Friday's data are likely to show inflation moderating while output revives, but an uneven recovery could mean contradictory data and more evidence for the China bears.
Oil eased, with Brent crude retreating 0.7 percent below $112 a barrel, while U.S. crude fell 0.9 percent to $96.20 a barrel.
Asian credit markets were subdued, with the spread on the iTraxx Asia ex-Japan investment-grade index barely changed early on Friday.
Greece struggled to form a government after a majority of voters rejected austerity measures in exchange for a bailout, putting the country at risk of bankruptcy and leaving the euro.
But euro zone officials on Thursday said they were prepared to keep financing Greece until Athens forms a new government, whether one emerges from Sunday's election or if new elections have to be held next month.
Greece has also been saved from an imminent insolvency after the euro zone's temporary bailout fund, the European Financial Stability Facility (EFSF), agreed on Wednesday to immediately disburse 4.2 billion out of a 5.2 billion sub-tranche of the bailout to Athens.
Stakes are critically high for the European Union to keep Greece afloat as the EU is now Greece's biggest creditor and a Greek default means euro zone taxpayers will take a hit.
Spain, facing pressure on its fragile banking sector, is expected to present new reforms to complete the clean-up of its banks on Friday, with the government seen approving a plan to force banks to park their toxic real estate assets in holding companies that would later sell them off.
(Additional reporting by Hideyuki Sano in Tokyo; Editing by Eric Meijer)