Asian shares extended losses on Friday, weighed down by worries over the risk of a recession in the world's largest economy as the United States faces a looming fiscal crisis and by uncertainty over a bailout for Greece, which kept sovereign bonds firmly bid.
Pressured by further losses on Wall Street, MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent, after sliding 1.3 percent on Thursday for its biggest one-day percentage drop in two months.
South Korean shares led the declines with a 0.7 percent drop, with blue-chips mostly down, while Shanghai shares were nearly flat.
Global stocks fell overnight on worries about Washington's ability to resolve the fiscal cliff in a timely manner before nearly $600 billion worth of spending cuts and tax increases kicks in early 2013 unless a compromise is reached to cut the deficit. There is also the issue of a debt ceiling, which needs to be raised to avoid a government shutdown.
A recession in the United States, which had recently defied a general trend in other parts of the world by showing signs of a modest recovery, could drag the global economy down further.
The Standard & Poor's 500 index dropped for a second day and closed below its 200- day moving average for the first time in five months on Thursday, signalling a weaker trend. It closed down more than 1 percent at its lowest since Aug. 2.
Against the general bearish sentiment, China reports several pieces of data for October this session, including fixed-asset investment and industrial output, which will likely show the country recovering from its slowest period of growth since early 2009.
Annual October consumer inflation released earlier in the day eased to its slowest pace in nearly three years, giving policymakers scope to further looser monetary policy if needed.
The focus has turned back to the economy after the U.S. election, with concerns over euro zone risk resurfacing while the fiscal cliff worries weigh on the local index, said Kim Soon-young, an analyst at IBK Securities, adding that Seoul shares could pare losses if China economic data is positive.
Japan's Nikkei average slipped 0.9 percent.
As investors reduced exposure to risk assets, safe-haven government bonds remained firm, with 10-year Japanese government bond yields hitting a fresh three-month low of 0.73 percent. Benchmark 10-year U.S. Treasury yield steadied around 1.635 percent, after touching a low