Spread betters pointed to opening losses for European stocks and E-mini futures for the S&P 500 were off 0.3 percent.

Asian markets were mostly lower, with MSCI's broadest index of Asia-Pacific shares outside Japan down 0.9 percent in the biggest daily drop so far this year.

Australia fell 0.8 percent and Shanghai 0.4 percent. Japan's Nikkei eased 0.7 percent as a weaker yen only helped limit some of the losses.

South Korean shares dropped to a two-week low early as reports came in that China had ordered tour operators to stop selling trips to the country, amid rising tensions over the deployment of a U.S. missile-defense system.

A chorus line of Fed officials singing of the need for higher rates has seen the implied probability of a move this month shoot to 74 percent, from just 30 percent at the start of the week.

Fed Chair Janet Yellen and Vice Chair Stanley Fischer are both due to speak later on Friday and are expected to stick to the same tune.

"The U.S. dollar has been snapped up across the board as a March Fed hike is heavily priced in," said Sean Callow, a senior currency strategist at Westpac.

"All it took was about a hundred comments from Fed officials, but markets have finally decided that "fairly soon" means less than two weeks and that perhaps 3 hikes this year means 3 hikes this year."

That was enough to make even Wall Street pause, and the Dow fell 0.53 percent, while the S&P 500 lost 0.59 percent and the Nasdaq 0.73 percent.

Caterpillar was among the biggest casualties, shedding 4.2 percent on news that federal law enforcement officials searched its Illinois facilities.

The prospect of a Fed hike on March 15 saw yields on two-year Treasury notes shatter their recent range to reach ground last trod in mid-2009.

With the European Central Bank still acting to suppress short-term euro rates, the spread between U.S. and German two-year yields yawned out to 214 basis points, the widest since early 2000 and up from a low of 183 in January.

That shoved the euro down to $1.0515 and set up a test of major support at the February low of $1.0492. The dollar likewise held at 114.18 yen and eyed the recent peak of 114.95. Against a basket of currencies, the dollar eased a fraction to 102.010 after touching its highest since Jan. 11.

That strength was not good news for commodities priced in dollars with everything from gold to copper taking a hit.

Gold was stuck at $1,233.50 an ounce, after suffering its biggest one-day decline since December on Thursday.

Oil prices took an extra blow after Russian crude production remained unchanged in February, showing weak compliance with a global deal to curb supply to tighten the oversupplied market.

Early Friday, U.S. crude was up 6 cents at $52.67, having shed more than 2 percent on Thursday, while Brent edged up 7 cents to $55.15 per barrel.

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