MSCI`s broadest index of Asia-Pacific shares outside Japan fell 0.7 percent, but gains in previous sessions left it up 4 percent for the week.

Japan`s Nikkei .N225 dropped 2.2 percent as the yen firmed, but remained on track for a weekly gain of 5.9 percent.

"This week is the first sign of change I have seen in 2016," Evan Lucas, market strategist at trading services provider IG, wrote in a note.

But "most fund managers are nearing their maximum levels of cash under their respective mandates. This capital needs to be deployed to confirm the change is on."

MSCI`s emerging market index .MSCIEF hit a six-week high overnight on hopes that oil prices were stabilizing, but the positive sentiment didn`t flow through to U.S. shares.

The S&P 500 .SPX shed 0.5 percent, dragged down by lackluster earnings from Wal-Mart Stores (WMT.N).

Oil prices reversed earlier gains on Thursday following a rise in U.S. stockpiles but look set to post their first rise in three weeks after the battered market took heart from a tentative deal by major producers to freeze output at January`s highs.

Still, doubts about how much other countries will cooperate have weighed on investors, with a focus on Iran, which has pledged to increase output sharply to regain market share lost during sanctions.

Brent crude extended losses on Friday, last trading down 0.8 percent at $34.02 per barrel, but is up 2 percent for the week.

U.S. crude last traded at $30.56, off a two-week high of $31.98 hit on Thursday but up 3.8 percent so far this week.

"I would assume oil prices will face downward pressure and there will be selling into a rally," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

In a sign that investor fears over a global economic slowdown are far from being on the wane, traditional safe-haven assets held firm after a strong outperformance on Thursday.

Gold XAU= surged 1.8 percent on Thursday to $1,230.90 per ounce and last stood at $1,225.96.

Investors also flocked to the safety of top-rated government bonds, with the 10-year U.S. Treasuries yield falling back to 1.7276 percent, compared with Wednesday`s one-week high of 1.8470 percent.

In the currency market, the yen regained its edge, rising to 112.93 per dollar JPY= from this week`s low of 114.875.

The euro fell to as low as 125.34 yen EURJPY= on Friday, a low last seen in June 2013, and last traded at 125.56 yen.

Against the dollar, the common currency EUR= traded at $1.1117, having slipped to a two-week low of $1.1071 on Thursday.

The minutes from the European Central Bank`s January meeting showed some policymakers are advocating the need to act pre-emptively in the face of new threats on the economy.

A big focus is on the British pound and the EU summit in Brussels, where UK Prime Minister David Cameron is seeking more favorable terms for its EU membership.

A successful deal there is expected to lead to a referendum on EU membership as soon as in June.

"We expect a correction lower in EURGBP should an agreement be reached at the meeting, although an impasse, to which we assign a non-negligible probability, would likely weigh on the GBP," wrote Barclays analysts in a report.

The pound stood at $1.4321 GBP=D4, having fallen to a near seven-year low of $1.4080 last month partly on worries about so-called "Brexit".

Against the euro, it stood at 77.635 pence per euro EURGBP=D4.

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