ASIAN shares fell on Friday and the safe-haven dollar hovered near its highest in a week-and-a-half after weak manufacturing data from the US, Europe and China heightened fear about the outlook for global growth.
A long-expected downgrade to the credit ratings of 15 of the world's biggest banks by ratings agency Moody's added to the gloom, which also weighed on commodities and currencies, such as the Australian dollar, that are linked to resource demand.
MSCI's broadest index of Asia Pacific shares outside Japan fell 1,4% and Tokyo's Nikkei share average lost 0,5%.
"It was expected that the market would undergo an adjustment after earlier climbs, and the soft data gave it a reason," said Lee Seung-woo, an analyst at KDB Daewoo Securities in Seoul.
Analysts at Citi said Asian stock markets outside Japan had suffered $1bn in redemptions in the seven-day period that ended on Wednesday, the biggest factor in a net outflow of $243m from global emerging-market equity funds.
US stocks fell about 2% on Thursday, racking up Wall Street's worst loss in three weeks, after a survey showed US factory growth at its slowest in 11 months in June.
That followed data showing the euro zone's private sector shrank at its fastest pace in three years this month, while Chinese manufacturing contracted for an eighth straight month.
Losses on Wall Street worsened after a bearish call from Goldman Sachs, which advised clients to bet on further falls in the broad S&P 500 index on expectation of more weakness in the economy.
Goldman said in a note: "We are recommending a short position in the S&P 500 index with a target of 1285," which is roughly 5% below current levels.
S&P 500 index futures traded in Asia were up 0,2% on Friday, pointing to a slight rebound when the market resumes.
The darkening outlook for the world economy has sparked a sharp sell-off in commodities this week, with Brent crude oil falling below $90 a barrel for the first time in 18 months.
Brent crude rebounded 0,7% to $89,88 a barrel on Friday, but remained down almost 8% on the week.
"Manufacturing is a key indicator of oil demand, and based on the data coming out of the US it doesn't look good, even though prices have been coming off," said Ben le Brun, a Sydney-based market analyst at OptionsXpress.
Copper eased a touch further, after tumbling in the previous session, to trade at about $7330 a ton, on course for its seventh weekly loss in the past eight weeks.
The dollar was steady against a basket of major currencies, after gaining nearly 1% on Thursday in its biggest rally in more than three months.
The euro traded at $1,2557, up 0,1% on the day but well off the week's peak of $1,2748 scaled on Monday. The Australian dollar bought $1,0054, having dropped more than 1,3% from Thursday's high of $1,0205.
Gold slipped 0,2% to $1563 an ounce, after falling 2,5% on Thursday to wipe out almost all of its 2012 gains as concern about the global economy robbed the metal of its appeal as an inflation hedge.
The retreat from riskier assets pushed investors towards safe-haven government debt, with Japanese government bonds following US Treasuries higher.
The 10-year JGB yield slipped half a basis point to 0,815%, within 2,5 basis points of its nine-year low of 0,79% hit on June 4.