Shares fell on Friday after soft US corporate results pulled Wall Street back from record highs, and as a string of data gave investors one of the first glimpses of the impact on global economic activity of Britain's vote to leave the EU.
European stocks and MSCI's leading global share index were both on course for their first consecutive daily losses in two weeks, while Japan's Nikkei posted its biggest decline over the same period.
Europe's FTSEuroFirst 300, Germany's DAX and France's CAC 40 and Britain's FTSE 100 were all down around 0.2 per cent in early trade, lifted from lows by German purchasing managers index figures.
German private sector growth hit its highest level so far this year in July, suggesting Europe's biggest economy is brushing off any uncertainty caused by Brexit. Comparable UK figures later on Friday are expected to show slowing activity.
“We've seen the 'Duracell bunny' momentum of the market finally wind down this week, with European and UK exchanges just running out of steam despite fresh record highs in the US," said Chris Beauchamp, senior analyst at IG.
Intel, the world's largest chipmaker, led Wall Street lower on Thursday after it reported slower revenue growth at its data centre business. US stocks are expected to open little changed on Friday.
“With a busy calendar today, that might see some more small downside for equities,” Beauchamp said, giving a nod to the meeting of G20 finance ministers and central bank governors this weekend in Chengdu, China.
Earlier, US Treasury Secretary Jack Lew said he saw little need for the same type of massive coordinated fiscal stimulus efforts used to combat recession in 2008-2009, despite an expected global growth slowdown following Brexit.
Easier policy?
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent, having hit a nine-month high on Thursday.
China's CSI 300 index and the Shanghai Composite both slipped about 0.5 per cent, poised for losses of around 1 per cent for the week.
Japan's Nikkei closed down 1.1 per cent, dragged down by the yen's 1 per cent rally on Thursday. The index is still up 0.8 per cent in a week in which it touched an eight-week high thanks to an initially weaker yen and expectations of fiscal and monetary stimulus.
“Pretty much everything is on the table when it comes to the next BOJ monetary policy decision on 29 July... except for outright helicopter money,” Frederic Neumann, co-head of Asian economic research at HSBC in Hong Kong, wrote in a note on Friday. “The case for more easing is evident.”
Dollar vs yen
The yen relinquished earlier gains, and the dollar was last up around 0.3 per cent at 106.10 yen.
The dollar index was flat at 96.95, having hit a four-month peak of 97.323 on Wednesday as traders once again put money back on the Federal Reserve raising interest rates this year.
The euro was steady at $1.1020. As widely anticipated, the ECB stood pat on monetary policy on Thursday. But the bank kept the door open to more policy stimulus, citing uncertainty and risks to the region's economic outlook.
US Treasury yields
Benchmark 10-year US Treasury yields were flat on the day but on course for a slight fall on the week, easing back after chalking up the biggest rise in over a year the previous week.
German bond yields were flat at -0.1 per cent, still on track for a fall on the week but up from earlier lows on the back of the surprisingly upbeat German PMI data.
Crude oil
In commodities, crude futures resumed extended overnight falls after data pointed to record US stockpiles of gasoline and other oil products. With Iraqi crude exports on the rise, supply glut concerns may be returning.
Brent crude fell 0.6 per cent to $45.90 a barrel and US crude fell 0.9 percent to $44.35 a barrel. Both contracts are poised for a fall of more than 3 per cent on the week.