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.
European stocks were seen opening modestly higher after a sell-off in the previous session, with financial spreadbetters calling the main benchmarks in London, Paris and Frankfurt up 0.1-0.3%.
Tokyo's Nikkei share average fell 1.2% and MSCI's broadest index of Asia Pacific shares outside Japan lost 0.3%, on track for a weekly loss of nearly 2%.
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.
Disappointing results from Agricultural Bank of China and telecoms operator China Unicom reinforced concerns about Chinese growth and helped knock Hong Kong's Hang Seng index down 1.1%.
SLOWER GROWTH
Fears of slower growth in key markets hurt big Japanese exporters, with Toyota Motor Corp down 1.8%, Honda Motor off 2.8% and Sony Corp losing 2.9%.
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%.
Wall Street stocks fell 0.7% on Thursday and U.S. crude slid almost $2 a barrel.
Growth jitters, gnawing at market confidence since China lowered its official 2012 growth target to 7.5% 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% 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. The Aussie slipped to around $1.0380, 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%, up slightly from 2.28% in late U.S. trade but still about 10 basis points below the 4 1/2-month high near 2.40% hit earlier this week.
Oil edged up around 0.1%, with Brent crude fetching around $123.26 a barrel and U.S. crude about $105.43.
Growth sensitive copper bounced off a 2% drop in the previous session, with London prices gaining around 0.7% to $8,350 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% to around $1,643 an ounce, set for its fourth straight week of losses.
