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Singapore - 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 eurozone 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 two-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.
"Fears of a Chinese hard landing are on the rise; overdone we think," said Vincent Chaigneau, strategist at Societe Generale.
"Concerns over Europe are burgeoning again, rightly so given the weak economy and the toxic focus on enlarging the firewall."
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 eurozone 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.
"We believe upcoming economic data from China may still be at risk of negative surprises," said Julius Baer's greater China analyst Alan Lam.
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 down 1.8%, Honda off 2.8% and Sony 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 US 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 US 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.
US 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 US trade but still about 10 basis points below the four-and-a-half 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 US crude about $105.43.
"The macroeconomic picture is getting better, especially in the US, and that's helping oil prices," said Ken Hasegawa, a commodity derivatives manager at Newedge Brokerage in Tokyo.
"But the recovery is very slow and there's still a lot of uncertainty regarding China and Europe."
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.
"It seems that funds have been trying to reallocate their assets," said Peter Tse, director at metals trader ScotiaMocatta in Hong Kong.
"With US interest rates higher, holding metals will be a little more expensive and people will try to scale down their positions."
