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Hong Kong - Asian markets slipped on Friday as the prospect of a military confrontation between Ukraine and Russia knocked confidence and offset forecast-beating US growth data.
The rise in geopolitical uncertainty sent investors scurrying back to lower-risk assets such as the yen, despite disappointing economic figures out of Tokyo that raise questions about the country's recovery.
Tokyo fell 0.64% as the stronger yen hurt exporters, while Hong Kong eased 0.35% and Seoul lost 0.3%, while Sydney and Shanghai were flat.
After enjoying a rally over the past few weeks, investors have been spooked by claims that Russian forces were inside Ukraine helping support pro-Kremlin separatists who have been fighting against Kiev's rule since April.
Nato said at least 1 000 Russian troops were on the ground in the country, fuelling worries of a war.
Moscow denies the accusations but US President Barack Obama said it was "plain for the world to see" that Russian forces were fighting in Ukraine. He and German chancellor Angela Merkel warned the actions "cannot remain without consequences", raising the prospect of even more sanctions against Moscow.
The developments overshadowed news from the Commerce Department that the US economy expanded at a 4.2% annual rate in April-June, revising upward its previous 4.0% estimate.
However, on Wall Street the S&P 500, which ended above 2 000 for the first time this week, pulled back from Wednesday's record close, shedding 0.17%. The Dow lost 0.25% and the Nasdaq dropped 0.26%.
Currency dealers shifted away from their recent positive positions, moving back into the yen, which is considered a safe option in times of uncertainty.
The dollar fetched ¥103.70 in early Tokyo trade, against ¥103.75 in New York and well off the seven-month high of ¥104.20 seen at the start of the week.
The euro bought $1.3181 and ¥136.69, compared with $1.3181 and ¥136.75 in New York.
The Japanese unit's gains came despite official figures showing household spending sank more than expected in July while industrial production was stagnant.
The data come after a bigger-than-expected contraction in the economy in April-June as an April sales tax hike bites into the country's recovery.
While inflation came in as forecast, analysts said the results will add pressure on the Bank of Japan to unveil fresh monetary easing measures to kickstart economic growth.
On oil markets US benchmark West Texas Intermediate for October delivery eased 7 cents to $94.48 while Brent crude for October rose 10c to $102.56.
Gold traded at $1 288.85 an ounce at 04:10, from $1 292.23 late on Thursday.
