Asian markets fell Friday and the euro was at a near two-year low against the dollar amid Europe's deepening debt woes, while disappointing US data and Chinese manufacturing numbers also weighed.
Hong Kong slipped 0.38 percent, or 71.18 points, to 18,558.34 and Shanghai was flat, edging 1.20 points up to 2,373.44.
The weak start to June came after a miserable May in which most markets gave up almost all the gains they had made since the turn of the year as the eurozone's debt crisis came back into sharp focus.
While Greece's political and economic future remains uncertain, Spain's banking sector is looking increasingly fragile, stoking fears that Madrid -- already battling fiscal woes -- could need an international bailout.
On Friday China said manufacturing activity grew at a much slower rate than expected in May, further confirming the world's number two economy is slowing rapidly after recent poor figures on trade, investment and industrial output.
The official purchasing managers index (PMI) fell to 50.4 from 53.3 in April, the China Federation of Logistics and Purchasing said in a statement.
A reading above 50 indicates expansion, while a reading below 50 suggests contraction.
Later, HSBC said its PMI for May stood at 48.4 compared with 49.3 in April.
"At this rate, the government may intervene with monetary stimulus towards the end of June once inflation slows to about three percent," Zhou Xu, an analyst with Nanjing Securities, told Dow Jones Newswires.
In the United States on Thursday the government lowered its estimate for first-quarter economic growth, to 1.9 percent from 2.2 percent, raising questions over how much of a rebound could be expected in the current quarter.
Two jobs reports -- weekly unemployment claims and private-sector job creation in May -- both were disappointing, indicating slow improvement in the economy.
On Wall Street the Dow fell 0.21 percent, the S&P 500 lost 0.23 percent and the Nasdaq slipped 0.35 percent. Eyes are now on key non-payroll jobs data out of Washington later in the day for a guide to the US economy's recovery.
The gloomy data sent dealers out of risk assets, pushing the euro lower.
The single currency was changing hands at $1.2343 in Tokyo morning trade from $1.2361 in New York late Thursday. Earlier Friday the unit briefly fell to $1.2323, a 23-month low.
It also remained weak against the safe-haven Japanese currency at 96.86 yen, compared with 96.82 yen in New York late Thursday, where at one point it fell to 96.51 yen, its lowest level since December 2000.
The dollar bought 78.43 yen, from 78.33 yen in New York.
Japanese Finance Minister Jun Azumi said Friday he would take "decisive action" if the yen kept rising, with his remark interpreted as a threat of market intervention to curb the yen's strength.
Japanese financial authorities have previously intervened in currency markets, including after the yen reached historic highs against the dollar last year. A stronger yen hurts exporters as it makes their goods more expensive overseas.
On oil markets New York's main contract, West Texas Intermediate (WTI) crude for delivery in July, was down 60 cents to $85.93 per barrel while Brent North Sea crude for July shed 69 cents to $101.18 in the late afternoon.
Gold was at $1,557.98 an ounce at 0810 GMT, compared with $1,566.06 late Thursday.
In other markets:
-- Taipei tumbled 2.68 percent, or 195.41 points, to 7,106.09.
Smartphone giant HTC shed 3.72 percent to Tw$414.0 while computer maker Acer was 1.64 percent lower at Tw$30.05.
-- Manila closed 0.56 percent lower, shedding 28.79 points to 5,062.44.
DMCI Holdings fell 4.49 percent to 55.35 pesos and BDO Unibank ended 6.38 percent down at 66 pesos.
Philippine Long Distance Telephone added 3.42 percent to 2,420 pesos.
-- Wellington fell 1.04 percent, or 36.29 points, to 3,452.00.
Fletcher Building slumped 4.29 percent to NZ$6.02 and Telecom was down 1.55 percent at NZ$2.54.
Source: AFP Asian Edition