Asian shares fell and commodity-linked currencies such as the Australian dollar slipped on Friday after disappointing U.S. economic data stirred doubts about the strength of the recovery.
Renewed worries on the euro zone debt crisis also kept riskier assets under pressure and supported safe-haven U.S. Treasuries, as a better-than-feared Spanish bond auction failed to allay concerns that Spain may follow Greece, Ireland and Portugal in needing an international bailout.
MSCI's broadest index of Asia Pacific shares outside Japan fell 0.5 percent and Japan's Nikkei share average lost 0.3 percent.
Euro STOXX 50 index futures slipped 0.1 percent, while financial bookmakers in London called the FTSE 100 index to open 0.2 percent lower.
After racing ahead in the first quarter amid improving data from the United States and liquidity injections from major central banks, global equity markets have stumbled in recent weeks, although the MSCI Asia ex-Japan, Nikkei and S&P 500 all remain up 10 percent or more for the year-to-date.
Put into the context of the first-quarter rally this pullback isn't unreasonable, particularly since the case for China is no longer strong growth, said Norman Chan, head of investments at wealth manager Calibre Asset Management.
U.S. index futures were flat in Asian trading, but Wall Street may get some direction later when conglomerate General Electric Co. reports quarterly earnings.
GE, who source earnings from so many parts of the economy, has the premise to move an equity market around that really seems to be struggling for direction at present, said Chris Weston, a dealer at IG Markets in Melbourne.
U.S. stocks fell 0.6 percent on Thursday, as worries about the health of the wider economy overshadowed a strong start to the corporate earnings season from the likes of Bank of America, Morgan Stanley and Microsoft.
The number of Americans claiming unemployment benefit for the first time fell less than expected last week, suggesting a slowdown in job creation. Other data showed factory activity in the Mid-Atlantic region slowed sharply this month and U.S. home resales fell for a second month in March.
Treasuries gained after the data and held firm on Friday, with the yield on 10-year notes at 1.96 percent, matching its level in late U.S. trade.
Currencies of commodity producers, which tend to be sensitive to economic growth expectations, retreated.
The Australian dollar eased about 0.2 percent to $1.0315, marking its second day of declines, although it recouped some of the lost ground later in the session.
Brent crude rose 25 cents to $118.25 a barrel, but was on course for its steepest weekly loss in more than three months.
The Spain sovereign debt auction went rather well, but the European economy is still very unstable which is affecting Brent prices, said Yusuke Seta, a Tokyo-based broker at Newedge.
Copper was almost unchanged around $8,075 a metric tonne and gold edged a touch higher to around $1,645 an ounce.
The dollar bought around 81.55 yen, having hit a 1-1/2-week high of 81.74, and the euro rose as high as 107.35 yen after Bank of Japan Governor Masaaki Shirakawa reiterated on Thursday that the central bank was ready to take further monetary easing action to support the economy.
The euro emerged unscathed from a choppy session on Thursday to trade around $1.3155, up around 0.1 percent on the day. It had hit a high of $1.3166 following the Spanish bond sale but then dropped on rumors, later denied, of a possible French rating downgrade.
Spain has emerged as the latest source of concern for investors in recent weeks, as long-standing fears about the balance sheets of domestic banks after a property bust have combined with worries about the country's fiscal health and weakening economy.
Madrid sold 2.5 billion euros in 2- and 10-year bonds, at the top end of the targeted amount. But yields on the key 10-year bond were higher, reflecting fears that it may miss budget deficit targets.
Finance ministers and central bankers were gathering in Washington for a meeting of the G20 and the semiannual meetings of the IMF and World Bank.
But the IMF's bid to win a big boost in funding to handle the euro zone debt crisis hit a speed bump on Thursday as Brazil demanded more power at the IMF for emerging economies as a condition for lending it extra cash.
Now, with the G20 convening in Washington, much attention will be drawn to how and where the International Monetary Fund draws up additional funding from in order to further beef up Europe's bailout funds, said Christopher Vecchio, analyst at DailyFX.
Should the G20 decide that the IMF's funding capacity is adequate ... I expect the European and commodity currencies to depreciate against the yen and U.S. dollar over the coming sessions.
(Additional reporting by Vikram Subhedar in Hong Kong, Ian Chua in Sydney and Jessica Jaganathan in Singapore; Editing by Michael Perry)