Asian shares fell on Friday and growth-linked currencies such as the Australian dollar were shunned after data showing shrinking factory activity in China and the euro zone heightened concerns about a slowdown in the global economy.

Materials stocks such as miner BHP Billiton were prominent among the losers, but crude oil steadied after tumbling overnight and copper bounced off a 2-week low.

Data on Thursday showed China's manufacturing sector activity shrank in March for a fifth successive month, while German and French manufacturing suffered a sharp decline that even the most pessimistic economists failed to predict.

Fears of a Chinese hard landing are on the rise; overdone we think, said Vincent Chaigneau, strategist at Societe Generale. Concerns over Europe are burgeoning again, rightly so given the weak economy and the toxic focus on enlarging the firewall.

European stocks were seen opening modestly higher after a sell-off in the previous session, with financial spreadbetters calling the main benchmarks in London <.FTSE>, Paris <.FCHI> and Frankfurt <.GDAXI> up 0.1-0.3 percent. <.EU> <.L>

Tokyo's Nikkei share average <.N225> fell 1.2 percent and MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> lost 0.3 percent, on track for a weekly loss of nearly 2 percent. <.T> <.AX>


Asset returns in 2012:

Euro zone PMIs vs GDP:

Reuters Insider TV weekahead:

Graphic on the oil poll:


The weak data from continental Europe's two biggest economies suggested the euro zone cannot avoid recession, while in China a senior government economist said the economy was facing more downward pressure than expected.

While a slowdown in Europe and China has been expected, investors were unnerved by the drop in new orders in both regions, which fuelled worries that an unexpectedly severe downturn could snuff out the global recovery.

We believe upcoming economic data from China may still be at risk of negative surprises, said Julius Baer's greater China analyst Alan Lam.

Disappointing results from Agricultural Bank of China <1288.HK> <601288.SS> and telecoms operator China Unicom <0726.HK> reinforced concerns about Chinese growth and helped knock Hong Kong's Hang Seng index <.HSI> down 1.1 percent


Fears of slower growth in key markets hurt big Japanese exporters, with Toyota Motor Corp <7203.T> down 1.8 percent, Honda Motor <7267.T> off 2.8 percent and Sony Corp <6758.T> losing 2.9 percent.

However, market participants said the sell-off offered buying opportunities for longer-term investors as they remained upbeat on the outlook of Japanese equities, among the best performers of 2012 with a year-to-date gain of nearly 20 percent.

Wall Street stocks <.SPX> fell 0.7 percent on Thursday and U.S. crude slid almost $2(1.26 pounds) a barrel. <.N>

Growth jitters, gnawing at market confidence since China lowered its official 2012 growth target to 7.5 percent in mid-March, have for the time being halted a rally in riskier assets driven by steadily improving U.S. data and massive liquidity injections by major central banks.

Rising risk aversion prompted investors to seek safety in the yen, which rose more than 1 percent against the dollar on Thursday.

The yen eased back a touch on Friday to around 82.80, while the dollar was flat against a basket of major currencies <.DXY>. The Aussie slipped to around $1.0380 (656 pence), leaving it sharply down on the week.

U.S. Treasuries were in demand as investors scaled back riskier bets. The 10-year notes were traded at a yield of 2.294 percent, up slightly from 2.28 percent in late U.S. trade but still about 10 basis points below the 4 1/2-month high near 2.40 percent hit earlier this week.

Oil edged up around 0.1 percent, with Brent crude fetching around $123.26 (77.92 pounds) a barrel and U.S. crude about $105.43 (66.65 pounds).

The macroeconomic picture is getting better, especially in the U.S., and that's helping oil prices, said Ken Hasegawa, a commodity derivatives manager at Newedge Brokerage in Tokyo.

But the recovery is very slow and there's still a lot of uncertainty regarding China and Europe.

Growth sensitive copper bounced off a 2 percent drop in the previous session, with London prices gaining around 0.7 percent to $8,350 (5,278.80 pounds) a tonne but still on course for a weekly loss.

Gold, which in recent months has lost its traditional safe-haven appeal and tended to move in step with other commodities, slipped 0.1 percent to around $1,643 (1,038.69 pounds) an ounce, set for its fourth straight week of losses.

It seems that funds have been trying to re-allocate their assets, said Peter Tse, director at metals trader ScotiaMocatta in Hong Kong. With U.S. interest rates higher, holding metals will be a little more expensive and people will try to scale down their positions.

(Additional reporting by Vikram Subhedar in Hong Kong, Ian Chua in Sydney, Dominic Lau in Tokyo and Francis Kan and Rujun Shen in Singapore)