China shares have fallen to new five-year lows and posted their worst weekly drop in five years, while bumper earnings at Amazon and Meta helped buoy world stocks ahead of key US jobs data later in the day.
The Shanghai Composite closed 1.5 per cent lower on Friday, with investors disappointed by cautious and piecemeal government stimulus measures to shore up the shaky economy.
For the week, the index sank 6.2 per cent, its largest such loss since October 2018.
The blue-chip CSI300 hit a five-year low, while shares in drug research and development group WuXi AppTec slid 20 per cent in Hong Kong after its mention in a US bill aimed at restricting access to Americans' genetic data revived geopolitical concerns.
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READ NOW"The tension between the US and China seems not dissipating," said Saxo's chief China strategist, Redmond Wong.
Investors were also growing impatient at the lack of big-ticket stimulus to shore up demand and confidence, Wong said.
Still, China pain failed to put a significant dent in world stock markets, with investors taking comfort from upbeat earnings.
European shares were broadly firmer, while US stock futures pointed to a strong open on Wall Street.
Quarterly results from Meta Platforms and Amazon.com impressed investors, with their shares surging 15 per cent and seven per cent in after-hours trading, respectively, adding a combined $US280 billion in stock market value.
Apple, however, fell three per cent after the close on disappointing China sales.
In Europe, Danske Bank jumped more than six per cent after the Danish lender reported fourth-quarter results and announced a share buyback program, while car maker Mercedes-Benz rallied after an upbeat update.
In Tokyo, Japan's Aozora Bank, however, slumped for a second straight session after provisioning for US office loan losses.
After early action, focus across world markets turns to the release of the January US jobs report at 8.30am, Washington time (0030 on Saturday AEDT).
Economists polled by Reuters estimated the US economy added 180,000 new jobs last month after creating 216,000 in December.
The data could further dampen market expectations of an interest rate cut in March, with annual wage growth forecast to have maintained its solid pace last month.
The US Federal Reserve on Wednesday signalled that rates would move lower this year but pushed back against expectations for an imminent rate cut.
Reflecting the still sizeable cuts expected to come this year, longer-term Treasuries are headed for the best week since mid December.
Ten-year Treasury yields were three basis points higher in London trade about 3.89 per cent, but are still down a whopping 27 bps for the week.
The rate sensitive two-year yield was up 4 bps at 4.23 per cent, but down 15 bps on the week.
This week's slide in bond yields kept the dollar on the back foot. The dollar index was a slightly lower on the day and on track for its first weekly decline of the year.
The euro was a touch firmer at $US1.0880, while sterling was perched at $US1.2749, having rallied 0.5 per cent after the Bank of England said on Thursday it would tread carefully about rate cuts.
Oil prices recouped some losses from the previous day following a decision by OPEC+ to keep its oil output policy unchanged, though they are still headed for weekly losses.
Brent crude futures were flat at around $US78.68 a barrel after falling more than two per cent the previous day, and US West Texas Intermediate crude a touch softer at $US73.74 a barrel.
Safe-haven gold was flat at $US2,053.