Greece's debt crisis weighed on sentiment Friday, with Asian markets mostly lower and the euro hitting a one-year low after the European Union raised its estimate for the country's deficit.
A weak lead from Wall Street was unable to provide any impetus for dealers after US unemployment data showed people were still struggling to get back on the jobs ladder.
Europe's statistics agency said Greece's 2009 public deficit stood at 13.6 percent of output instead of the previously forecast 12.9 percent, and added that this could rise due to poor data reporting from Athens.
The problem was stoked further when risk evaluator Moody?s Investors Service downgraded its rating on Greece's debt.
The rates demanded by Greece's lenders later jumped above 8.5 percent.
The developments hammered the euro, which fell to 1.3202 dollars at 8:02 am (2302 GMT Thursday) in Tokyo, its lowest since April 30, 2009 before trimming losses to 1.3235 in the afternoon. It had traded at 1.3289 dollars in New York late Thursday.
Against the yen, the euro fell to 123.63 from 124.23 in New York. The dollar traded at 93.43 yen, slightly lower than 93.46 in New York.
The revision came as Athens tried to broker the terms of a bailout from the European Union and International Monetary Fund to avert a possible debt payment default caused by the soaring interest rates.
"Markets have become more nervous about the negotiations between Greek, IMF and EU officials and the potential for contagion if these negotiations fall through," Barclays Capital said in a note to clients.
"EU and IMF officials are not likely going to agree to a bailout package without Greece agreeing to significant fiscal restructuring," the investment bank said. "This becomes more likely as financial conditions worsen in Greece."
The deepening crisis has upped pressure on other eurozone members such as Ireland, Spain and Portugal, who all face similar problems and whose dangers were highlighted by the IMF Wednesday.
Asian stocks were lower as dealers became more risk-averse.
Tokyo closed 0.32 percent, or 34.63 points, lower at 10,914.46 as exporters were hurt by the strengthening yen.
Sydney gave up 0.53 percent, or 25.9 points, to close at 4,881.5.
Hong Kong fell 0.77 percent by the break and Singapore lost 0.26 percent.
Shanghai lost 0.60 percent as investors remained worried over recent policy measures taken to curb speculation in the real estate market, dealers said.
"Property and bank stocks will likely remain sluggish with the overhang of policy tightening concerns," Guosen Securities analyst Wang Junqing told Dow Jones Newswires.
Shares in New York were flat after the Labor Department on Thursday reported new claims for unemployment insurance benefits fell five percent last week after a fortnight of increases.
"The actual level of claims is still quite high, and although the trend in claims could support the notion that the labour market has stabilised, it does not support the notion that there has been a strong pickup in hiring activity," said Patrick O'Hare at Briefing.com.
Eyes were also on the United States, where President Barack Obama slammed Wall Street for greed but called for help from the "titans of industry" in overhauling the financial system to avoid another financial crisis.
"We will not always see eye to eye. We will not always agree. But that does not mean we have to choose between two extremes," he said, calling for new, "common sense" rules to quell abuses but retaining the "power of the free market."
Markets are also awaiting weekend G20 talks in the United States, where a global "Tobin tax" on financial transactions and the Chinese yuan's peg to the dollar will likely be discussed.
Oil was lower, with New York's main contract, light sweet crude for delivery in June, off 26 cents at 83.44 dollars a barrel. Brent North Sea crude for June dropped 37 cents to 85.30 dollars.
Gold opened at 1,139.00-1,140 US dollars an ounce in Hong Kong, down from Thursday's close of 1,148.50-1,149.50 dollars.
In other markets:
-- Seoul closed 0.14 percent, or 2.49 points, lower at 1,737.03.
-- Taipei closed up 0.33 percent, or 26.20 points, at 8,004.89.
Hon Hai rose 1.41 percent to 144.5 Taiwan dollars and Taiwan Semiconductor Manufacturing Co was up 0.17 percent to 61.7.
-- Manila closed 0.21 percent, or 6.88 points, higher at 3,244.45.
Dealers said trade was cautious ahead of presidential elections on May 10.
Philippine Long Distance Telephone Co. was steady at 2,445 pesos while A and B shares of San Miguel Corp. were also unchanged at 73.50 pesos and 74 pesos, respectively.
-- Wellington rose 0.43 percent, or 14.20 points, to 3,301.66.
Telecom added 0.5 percent to 2.19 New Zealand dollars, while Contact Energy added 0.7 percent to 6.22.
Fletcher Building edged up 0.1 percent to 8.44.
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