MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent while Japan's Nikkei dropped 1.4 percent to near-two-month lows, with financials coming under pressure.
Bank shares led losses in Europe and the U.S. markets on Thursday, amid talk of more lay-offs and cutbacks planned by Europe's major lenders as they struggle with zero rates.
U.S. S&P 500 Index <.SPX> lost 1.2 percent, with financial shares <.SPSY> falling 1.9 percent. In Europe, the FTSEurofirst 300 closed down 0.8 percent, hurt by a drop of more than 2 percent in financials.
"When bank shares are making big falls and their CDS spreads are rising like this, obviously you would think something is afoot. If they keep falling in today's session, that is going to be really worrying," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
U.S. stock futures
Despite a chorus of comments from Fed policymakers warning about more rate hikes, however, many investors think the global economy is too weak to allow the Fed to raise rates all that fast.
The 10-year U.S. Treasuries yield
Lower yields undermined the dollar given that prospects of higher U.S. yields were the main attraction behind the currency's firmness in recent years.
Investors instead bought back the yen
Traders also think it would be hard for Japanese authorities to intervene to stem the yen's rise after Group of 20 agreement in February warned countries to refrain from competitive devaluation.
Japanese Finance Minister Taro Aso said on Friday it will take necessary steps on currencies, but declined to comment on the issue of intervention.
The yen rose to a high of 107.67 to the dollar, its highest since October 2014, on Thursday and last stood at 108.66.
On the other hand, commodity-linked currencies and many emerging economy currencies stepped back from recent multi-month highs on the risk-averse mood among investors.
The Australian dollar traded at $0.7514
In commodities market, copper
China may be about to shock the global copper market by unleashing some of its stockpiles of the metal, which are near record highs, on to the global market.
Oil prices were mildly softer on Thursday after data was published showing higher weekly inventories at a big U.S. crude storage hub.
Global benchmark Brent crude futures