Asian markets turned mostly lower Friday, tracking a sell-off in New York, and capping a volatile week as investors grow concerned about the state of the global economy.
However, Hong Kong ended on a high in late buying while Tokyo also recovered from a morning sell-off to close the day in positive territory thanks to a rally in the dollar against the yen.
Dealers have taken their foot off the pedal after a March advance, with analysts saying there is a sense that central banks from Asia to the Americas are running out of options to kickstart world growth.
Last month saw the European Central Bank push interest rates deeper into negative territory in a bid to ramp up lending, a policy adopted by the Bank of Japan in January. Also, the Federal Reserve has lowered its forecasts for raising borrowing costs this year and said it did not expect to make any move until after June.
But despite the move to loosen monetary policy, growth remains stubbornly low and experts said the banks' magic could be wearing off.
"We are seeing central bank fatigue," Niv Dagan, executive director at Peak Asset Management LLC in Melbourne, told Bloomberg News.
"We’re definitely moving to a risk-off scenario and there's been a strong flight to safety. Investors are cautious and are extremely nervous that global central bank intervention won't actually stimulate growth in the economy."
The glum outlook weighed on buying sentiment. Shanghai closed 0.8 percent lower and Sydney shed 0.6 percent, while Seoul, Singapore and Wellington were also sharply lower.
The losses follow big falls in New York, where all three main indexes lost one percent or more.
- Yen in retreat -
However, Hong Kong ended up 0.5 percent and Japan's Nikkei -- which on Thursday rose for the first time after seven straight losses -- also ended a seesaw day 0.5 percent higher.
Despite the recovery in the broader Nikkei index, market heavyweight Fast Retailing, operator of the Uniqlo clothing chain, dived almost 13 percent after forecasting a big profit fall this fiscal year.
The climb came on the back of a receding yen, which helped exporters. The dollar rose to 108.85 yen from 108.31 yen in New York, where it fell at one point to 107.68 yen.
The Japanese currency has soared to 17-month highs since Monday as worries about the global economy send dealers rushing for the safe haven, while the prospect of US interest rates remaining low for some time has also led to a shift from the dollar.
The greenback had started the year above 120 yen and was still at 112 yen last Friday.
On Friday top government spokesman Yoshihide Suga told a regular news briefing its rise was "one-sided" , adding that "excess volatility and disorderly movements in exchange rates can have adverse implications".
He went on to say: "The government is monitoring the foreign exchange market closely. Depending on the situation, we will take necessary action."
Suga did not say whether intervening in currency markets was on the table.
Oil prices climbed as traders look ahead to next weekend's meeting of major producers, with hopes a deal to freeze output can be reached. A surprise fall in US stockpiles also provided some much-needed relief.
West Texas Intermediate was up three percent at $38.36 in the afternoon and Brent gained 2.4 percent to $40.39.
In early European stock market trade London, Frankfurt and Paris each rose 0.5 percent.
- Key figures at 0810 GMT -
Tokyo - Nikkei 225: UP 0.5 percent at 15,821,52 (close)
Shanghai - Composite: DOWN 0.8 percent at 2,984.96 (close)
Hong Kong - Hang Seng: UP 0.5 percent at 20,370.40 (close)
London - FTSE 100: UP 0.5 percent at 6,168.17
Euro/dollar: UP at $1.1382 from $1.1372 on Thursday
Dollar/yen: UP at 109.00 yen from 108.35 yen
New York - Dow: DOWN 1.0 percent at 17,541.96 (close)