A batch of worse-than-forecast US data provided further signs that the world's number one economy was softening but that was not enough to help push the S&P 500 and Nasdaq to more record highs.
The readings showed more people claiming for unemployment benefit than estimated, housing starts falling and a key gauge of business confidence for June well down from May.
Meanwhile, Minneapolis Fed boss Neel Kashkari said it could take a year or two to bring inflation back down to the central bank's two percent target, echoing his colleagues' warnings that they wanted to take their time before cutting borrowing costs.
The economic figures boosted interest rate cut hopes but were overshadowed by losses in market titans including Nvidia, Apple and Microsoft who have spearheaded the recent tech-fuelled rally in US markets.
The 3.5 percent drop in Nvidia meant it relinquished its crown as the world's most valuable publicly traded firm to Microsoft, which it had overtaken earlier this week.
Asian traders tracked the weak lead, with Hong Kong, Shanghai, Seoul, Wellington, Taipei and Manila all down. Singapore, Sydney and Jakarta edged up while Tokyo was flat.
Attention is once again being given to the yen as it edges back towards the 34-year low against the dollar, which led to a suspected intervention by Japanese authorities in April.
Fading hopes that the Fed will cut interest rates more than once this year -- if at all -- have pushed the dollar up against its peers in recent weeks, with the yen taking a hit owing to the Bank of Japan's refusal to tighten monetary policy quicker.
While BoJ is expected to announce further normalisation measures at its next meeting, the big difference in yields between the two central banks means investors are sticking with US assets for now.
The yen was barely moved Friday, a day after weakening to around 159 per dollar from 157.80.
That led top currency official Masato Kanda to repeat that the government was ready to act when appropriate and movements were too quick -- he said earlier in the year that a 10-yen move in either direction was considered too much.
Authorities are suspected to have intervened when the Japanese unit fell past 160 to the dollar two months ago.
However, analysts have said interventions had little long-term impact.
And Monex's Helen Given added: "I'm more and more convinced that currency officials are giving up on the yen.
"The yield differential is just too much to overcome right now, and with the US now only eyeing one cut this year it's not going to materially improve anytime soon."
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: FLAT at 38,626.95 (break)
Hong Kong - Hang Seng Index: DOWN 1.3 percent at 18,100.46
Shanghai - Composite: DOWN 0.2 percent at 3,000.94
Euro/dollar: UP at $1.0713 from $1.0705 on Wednesday
Euro/pound: UP at 84.61 pence from 84.56 pence
Dollar/yen: DOWN at 158.90 yen from 158.91 yen
Pound/dollar: UP at $1.2662 from $1.2657
West Texas Intermediate: DOWN 0.1 percent at $81.20 per barrel
Brent North Sea Crude: DOWN 0.1 percent at $85.59 per barrel
New York - Dow: UP 0.8 percent at 39,134.76 (close)
London - FTSE 100: UP 0.8 percent at 8,272.46 (close)
dan/rsc
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