Worries about the fragility of global economic recovery hit financial markets again on Friday, knocking world stocks down for the fourth session in a row ahead of a summit of Group of 20 nations.
Currency traders also sold higher-yielding currencies.
Investors have pulled back a bit from riskier assets this week as evidence built that economic growth, particularly in the United States, may be slowing.
This has combined with fears that the spending cuts and tax rises being promulgated by European governments to cut debt will hurt the recovery.
G8 leaders meeting on Friday in Canada -- turning into the G20 on Saturday -- are set to grapple with this issue with Washington warning against cutting too far and too fast.
The cohesion generally evident among policymakers in dealing with the global crisis is in danger of giving way to a more divisive debate about how to manage the recovery, Credit Agricole analysts said in a morning note to clients.
MSCI's all-country world index <.MIWD00000PUS> was down 0.2 percent, heading for a 2.7 percent weekly loss. Its emerging market counterpart <.MSCIEF> was down 0.6 percent.
European shares were bucking the trend, however, with the FTSEurofirst 300 <.FTEU3> up 0.3 percent after three days of losses.
But the mood was still cautious.
No one is really wanting to take any big positions ahead of the G20, said Justin Urquhart Stewart, director at Seven Investment Management.
Earlier, Japan's Nikkei average fell 1.9 percent.
The dollar made little headway in subdued trade ahead of the G20 leaders' summit and the yen held near the one-month highs it hit against the U.S. currency on Thursday.
It's a little bit of a strange situation as the euro should usually suffer more in periods of risk aversion, but we are seeing some position adjustments ahead of the G20, said Roberto Mialich, currency strategist at Unicredit in Milan.
The euro was flat on the day at $1.2330. The dollar was flat against a basket of currencies <.DXY>.
Euro zone government bond yields were also flat. (Additional reporting by Joanne Frearson and Tamawa Desai, editing by Mike Peacock)