Japanese and South Korean shares fell while the won currency came under pressure on Friday, as rising tensions in the Korean peninsula dented confidence in the world's economy.
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The dollar was on the back foot against many other currencies after comments from President Donald Trump earlier this week that the U.S. currency was "getting too strong" and that he would like to see interest rates stay low.
Japan's Nikkei dropped 0.5 percent to a four-month low while South Korea's Kospi lost 0.6 percent. Shanghai shares were down 0.9 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent, though many markets in the region, including Australia, Singapore and Hong Kong, were closed for Good Friday.
European markets are also shut for the holiday.
"There's been nothing to cheer about over the last 24 hours. Geopolitical tensions seem to be rising all over the place," said Masahiro Ayukai, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Investors were spooked by worries North Korea may conduct a nuclear test or conduct other actions that could provoke neighbouring countries as early as this weekend.
News that the United States on Thursday dropped "the mother of all bombs", the largest non-nuclear device it has ever unleashed in combat, in Afghanistan soured investor moods further.
MSCI's ACWI, which covers 46 world share markets, dropped to its lowest level since early March.
In currency market, the Korean won fell 1.0 percent from its previous local close to 1,140.6 to the dollar.
But the dollar lacked momentum against most other currencies after Trump's verbal intervention on Wednesday.
The Japanese yen hit a five-month high of 108.73 to the dollar on Thursday and stayed close to that level, last trading at 108.93 yen per dollar.
The euro was little moved at $1.0618, on course to post its first weekly gain in three weeks, though uncertainty over the French presidential election continued to weigh on the currency.
Trump said also on Wednesday that his administration will not label China a currency manipulator in a report due shortly.
Traders are nonetheless looking to the report as his administration has touted a new term "currency misalignment" as a cause of trade imbalances it seeks to address.
"While China will not be named as a manipulator, if countries like Japan, Germany and China remain on its monitoring list and the report steps up criticism, for instance on their monetary policies, then the dollar could fall further," said Shuji Shirota, head of macroeconomic strategy at HSBC in Tokyo.
The Turkish lira was little changed ahead of Sunday's referendum on constitutional change, which would give the president more power.
The benchmark U.S. Treasury yield skidded to its lowest levels since November on Thursday, with the 10-year yield hitting 2.218 percent, down more than a half percentage point from a high of 2.629 percent a month ago.
In addition to geopolitical risks, the bond yields have been driven lower by growing disenchantment among investors that much of Trump's stimulus and deregulation plans will take many months to implement.
The fall in yields came around even as Federal Reserve officials indicated the Fed could start shrinking its holding of Treasuries and mortgage bonds later this year.
The markets perception on the Fed's policy has not changed drastically over the past month, with money market futures pricing in about a 60 percent chance of a rate hike in June.
U.S. stock and bond futures are not traded on Good Friday.
(Editing by Sam Holmes and Richard Borsuk)