Asian stocks fell to a two-year low today, down for a fourth straight week, after a surge in oil prices above $121 enflamed inflation worries and the spiralling financial crisis showed no signs of ending.
European stock index futures rose, with commodity stocks likely to benefit from strong metal and crude prices.
Crude prices have gained more than 6 per cent this week on escalating tensions between the United States and Russia, the world's second-largest oil exporter. Russia's military intervention in Georgia has disrupted crude transit and supported prices.
A rise in commodity prices cut a two-week rally in the US dollar short, though analysts said the currency's 1.3 per cent decline this week was understandable given its stellar recently and that an upward trend is still intact.
Investors' anxieties about the financial sector remain unsoothed. Freddie Mac, one of the top U.S. mortgage finance companies, is talking with private-equity and other investors about buying some shares but faces fears that a government bailout would wipe out any investment, The Wall Street Journalsaid.
Japan's Nikkei share average fell 0.7 per cent to 12,666.04, its lowest close in nearly five months, as exporters such as Honda Motor Company declined on a stronger yen.
The euro fell 0.2 per cent to $1.4880 recovering from a a six-month low of $1.4630 touched on Tuesday. Against the yen, the dollar climbed 0.5 per cent to 108.95 yen.
"The trading environment is worse than yesterday as the yen became stronger after yesterday's close and oil prices rose sharply," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.
"Lingering worries about the global economy, including Japan, are also weighing on the market."
The MSCI pan-Asia stocks index was down 0.8 per cent, after hitting a two-year low in early trade. The Asia-Pacific ex-Japan index edged up 0.2 per cent but lost nearly 3.0 per cent on the week.
South Korea's KOSPI shed 1.0 per cent to a 16-month low, with shares of the country's top commercial lender, Kookmin Bank leading the index lower with a 6 per cent fall.
HongKong's markets were shut because of a typhoon.
Some analysts said markets in Asia were getting closer to a bottom, assuming that the US recession began when regional markets peaked in November 2007.
Over the last 50 years, US recessions lasted between six and 16 months. US stocks on average bottomed four months before the economy would level out and Asia stocks about a month later.