Asian stocks fell for a seventh consecutive day on Friday, led by selling in technology counters on wariness about the broader economic outlook, while the euro held above one-week lows as worries about the euro-zone's debt problems outweighed a likely interest rate rise by the European Central Bank next month.
European shares are set for a weaker start, with bookmakers seeing main indexes down between 0.2-0.4 percent.
Economic data from two of Asia's economic engines – China's trade data and India's industrial output were broadly in line with market estimates and failed to provide any fresh triggers to cautious traders.
"Equity valuations are neither expensive nor cheap if you look at most markets in Asia today. I don't think valuations are flashing a buy or sell signal at this point in time," said Binay Chandgothia, chief investment officer at Principal Global Investors.
"So you keep going back to other factors, i.e. your perceptions on growth, your perceptions on macro policy," he said. His firm manages more than $200 billion in assets worldwide.
Japan's Nikkei – trading at just 1.1 times book value, the cheapest in the region — jumped more than 1 percent, though gave up a big chunk of its gains by the close.
Australian shares were up 0.2 percent, easing slightly from the 1 percent gains after they opened, while Korean shares turned lower pressured by an interest rate hike.
The MSCI index for Asia-Pacific shares outside Japan slipped 0.4 percent, heading for its seventh consecutive week of losses and is down for the year.
The Chinese stock market also trended lower on concerns over further monetary tightening from Beijing. Chinese shares were the worst performers in the region in May.
Shares of Tencent Holdings , China's most valuable Internet company, dropped 3.7 percent to a two-month low and weighed on the broad market in Hong Kong, underscoring the bearishness in technology shares on Friday.
The MSCI index for Asia-Pacific technology shares outside Japan led declines, falling two percent, led by a 7 percent fall in smartphone maker HTC Corp and weakness in Hynix Semiconductor .
BONDS DRAW FUNDS
Even as equities registered yet another torrid week, bonds continued to outperform as data from fund tracker EPFR Global showed emerging market bond funds received new money aggregating $1.4 billion in the week to June 8, an eight-month high, compared to tiny outflows from equity funds.
Measured in dollar-adjusted terms, total returns for the broader JP Morgan GBI-EM Asian index is nearly 2.5 percent so far this year with gains set to accelerate as most Asian central banks are set to keep off from tightening policy further.
This week alone, four out of five central banks in the region held interest rates steady with Australia and Indonesia even injecting a tone of dovishness in their policy statements.
"EM is slowing due to a number of factors, one of which is the impact of increased tightening as a result of inflationary pressures brought on by excess global liquidity conditions," said Robert O Abad, a U.S.-based analyst with Western Asset Management, which oversees over $480 billion in assets.
Expectations of further quantitative easing by the Fed also receded after the unexpectedly strong U.S. trade data offered a glimpse of hope that the world's biggest economy may be recovering quickly.
Abad said that although the end of QE2 would be negative for technical flows into risky markets, there was an upside.
"It would be a positive for the real economy side of EM as a deceleration in capital inflows would mitigate the need for further tightening and capital controls which only curtail growth," he said.
In currency markets, the strong U.S. exports data and the festering euro zone debt crisis, pulled the euro down to a one-week low against the dollar, even after the European Central Bank hinted at a July interest rate hike.
With the euro on the back foot, the dollar bounced to a one-week high against a basket of major currencies. The dollar index briefly rose as high as 74.297, well off a one-month low of 73.506 set earlier in the week.
Bonds suffered with yields on ten-year U.S. Treasury notes rising back to near the 3 percent line after dipping to a low 2.94 percent earlier this week.
Brent crude oil prices extended gains to a one-month high of nearly $120 per barrel after OPEC's surprise failure to reach a deal on raising output raised concerns of tighter supplies later in the year.
