Demonstrators hold a mock guillotine with a banner reading "Thieves' cutter" during a protest against austerity measures announced by the Spanish government in Madrid, Spain, Thursday July 19, 2012. Concerns over Spain's attempts to restore market confidence in its economy resurfaced Thursday after a bond auction went poorly and its borrowing costs edged higher - even as the country's Parliament passed the latest round of harsh austerity measures designed to cut its bloated deficit.
European stock futures were indicating a weak open with the Eurostoxx 50 futures and the DAX futures down 0.1 percent and CAC 40 futures off 0.3 percent. S&P futures were down 0.4 percent.
Oil prices eased after hitting an eight-week high overnight as Middle East tension stoked supply concerns, while a rally in soft commodities has seen corn and soybean prices soar to record highs due to a worsening U.S. farm-belt drought.
The euro fell against the dollar and hovered near a record low versus the Australian dollar on Friday, undermined by worries about Spain woes and recent falls in shorter-term euro zone interest rates.
Weak demand at a bond auction pushed Spain's 10-year bond yield above 7 percent on Thursday for the first time in more than a week.
The MSCI Asia Pacific ex-Japan index fell 0.2 percent but is up 2.3 percent on the week.
"We've had a reasonably good week for equities and there's something of a shift in terms of what people are looking at," said Christian Keilland, head of trading at brokerage BTIG in Hong Kong.
"There's obviously some rotation into the tech sector and everyone's looking at the agriculture space to see how that may affect things."
NET OUTFLOWS THIS WEEK
There was evidence suggesting some investors were selling into strength with regional funds seeing net outflows of $63.3 million compared with the prior week's inflows, according to Citigroup.
Cyclical markets such as Korea and Taiwan led the outflows, Citigroup said.
Japan's Nikkei fell 1.4 with pharma and electrical equipment makers the biggest drags as worries about U.S. economic growth discouraged investors.
Shrinking factory activity in the U.S. mid-Atlantic region and more evidence of sluggish job growth has kept investors in export-reliant Japan wary about the impact of soft U.S. data on corporate earnings.
Financials were also under pressure with Mitsubishi UFJ down 3.4 percent after shares of Morgan Stanley, in which the Japanese bank owns a stake, tumbled as it reported a drop in revenue.
Banks remained under pressure in South Korea in the wake of a domestic rate-fixing probe that follows investigations into the suspected manipulation of the Libor international benchmark in other major economies.
A group of banks being investigated in an interest rate rigging scandal are looking to pursue a group settlement with regulators rather than face a Barclays-style backlash by going it alone, people familiar with the banks' thinking said.
Grain prices pushed to record highs overnight as scattered rains in the U.S. Midwestdid little to douse concerns over the worst American drought in half a century or relieve worries about higher food prices.
Corn for September delivery at the Chicago Board of Trade set a record high of $8.16-3/4 a bushel, while soybeans for August delivery also set a record high of $17.49. Wheat for September rose 4 percent at $9.35 and set a four-year high.
Spot gold hovered near $1,580 an ounce on Friday, retaining gains from the previous session as weak U.S. economic data kept alive hopes for more monetary stimulus from the central bank, which would drive investors to bullion.
U.S. crude was down 0.8 percent while Brent futures for September delivery were off 0.4 percent.
Oil prices have soared 20 percent over the past month.
In the Middle East, a mid-week attack that claimed the lives of top officials in Syrian President Bashar al-Assad's inner circle and a Bulgarian bus bombing that killed Israeli tourists - an act Israel blamed on Iran - reinforced fears that oil shipments could be disrupted.