TOKYO Asian shares slipped from near three-week highs hit earlier this month on Friday, as a rally in oil prices paused and investors remained cautious about the outlook of the global economy.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.2 percent while Japan's Nikkei .N225 dropped 1.5 percent.
MSCI's emerging market index .MSCIEF hit a six-week overnight on signs of stabilization in oil prices, but U.S. shares dipped, with S&P 500 .SPX shedding 0.5 percent, dragged down by lackluster earnings from Wal-Mart Stores (WMT.N).
Oil prices dipped on Thursday following a rise in U.S. stockpiles but look set to post their first gains in three weeks after the battered market took heart from a tentative deal by major producers to freeze output at January's highs. [O/R]
Brent crude LCOc1 settled down 0.6 percent at $34.28 per barrel on Thursday.
U.S. crude last traded at $30.56 CLc1, off a two-week high of $31.98 hit on Thursday but up 3.8 percent so far this week.
Still, there are doubts about how much other countries will cooperate, with a focus on Iran, which has pledged to increase output sharply to regain market share lost during sanctions.
"I would assume oil prices will face downward pressure and there will be selling into a rally," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
In a sign that investor fears over a global economic slowdown are far from being on the wane, traditional safe-haven assets held firm after a strong outperformance on Thursday.
Gold XAU= surged 1.8 percent on Thursday to $1,230.90 per ounce and last stood at $1,231.00.
Investors also flocked to the safety of top-rated government bonds, with the 10-year U.S. Treasuries yield US10YT=RR falling back to 1.738 percent, down more than 10 basis points from Wednesday's one-week high of 1.8470 percent.
In the currency market, the yen regained its edge, rising to 113.25 per dollar JPY= from this week's low of 114.875.
The euro fell to as low as 125.595 yen EURJPY= on Thursday a low last seen in June 2013, and last traded at 125.70 yen.
Against the dollar, the common currency EUR= traded at $1.1112, having slipped to a two-week low of $1.1071 on Thursday.
The minutes from the European Central Bank's January meeting showed some policymakers are advocating the need to act pre-emptively in the face of new threats on the economy.
A big focus is on the British pound and the EU summit in Brussels, where Prime Minister David Cameron is seeking more favorable terms for its EU membership.
A successful deal there is expected to lead to a referendum on EU membership as soon as in June.
"We expect a correction lower in EURGBP should an agreement be reached at the meeting, although an impasse, to which we assign a non-negligible probability, would likely weigh on the GBP," wrote Barclays analysts in a report.
The pound stood at $1.4330 GBP=D4, having fallen to a near seven-year low of $1.4080 last month partly on worries about so-called "Brexit".
Against the euro, it stood at 77.52 pence per euro EURGBP=D4.
(Editing by Jacqueline Wong)
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