Global growth concerns weighed on stocks again Friday, while the euro was hurt by a sharp disagreement in Europe over how to deal with Greece's debt crisis.
Though U.S. stocks broke a six-day losing streak on Thursday, the gains petered out, leaving sentiment lackluster in Asian and European trading.
A smaller than anticipated Chinese trade surplus in May and a bigger than anticipated decline in British industrial production in April added to the view in the markets that global growth is slowing _ and not just in the U.S.
"Sentiment in the U.S. is likely to remain key," said Yusuf Heusen, senior sales trader at IG Index. "Yesterday saw Wall Street break its six-day losing streak, but with the mood turning even before the close, there seems to be little reason for traders to be getting too excited with many likely to be more than happy to simply to see the weekend break."
In Europe, the FTSE 100 index of leading British shares was more or less unchanged at 5,857 while Germany's DAX rose 0.1 percent to 7,164. The CAC-40 in France was 0.4 percent lower at 3,864.
Wall Street was set for a modest retreat at the open _ Dow futures were 0.1 percent lower at 12,037 while the broader Standard & Poor's 500 futures fell a similar rate to 1,281.
In the currency markets, the euro continued its descent from recent one-month highs amid signs that policymakers in Europe have divergent views on how to deal with the Greek debt crisis.
Signs of discord were evident Thursday, when the European Central Bank's president Jean-Claude Trichet issued a thinly veiled riposte to Germany about forcing Greece's bondholders to share some of the pain in helping the country.
Germany's finance minister Wolfgang Schaeuble has proposed that bondholders contribute a "substantial" portion of a fresh bailout package for Greece by giving the country an extra seven years to repay the bonds. But Trichet said nothing should be done that would be deemed "a credit event" by the ratings agencies and that any private sector involvement has to be done on a voluntary basis.
"The escalation of tensions between Germany and the ECB _ tensions that markets believed had been resolved _ was a key factor undermining confidence," said Derek Halpenny, European head of global currency research at The Bank of Tokyo-Mitsubishi UFJ.
"For the financial markets to remain stable and the euro supported there will need to be a resolution to the German-ECB conflict," he added.
By late morning London time, the euro was 0.3 percent lower at $1.4476. Just a day ago and before Trichet's comments, it was trading over $1.46.
Earlier in Asia, Japan's Nikkei 224 index rose 0.5 percent to close at 9,514.44, while South Korea's Kospi index slid 1.2 percent to 2,046.67 after the Bank of Korea raised its key interest rate for the fifth time in less than a year as it fights inflation.
Hong Kong's Hang Seng ended 1.3 percent lower at 22,315.47 while the Shanghai Composite Index edged up less than 0.1 percent to 2,705.14.
In the oil markets, prices remained over $100 a barrel in the wake of the surprise decision earlier this week from the OPEC oil cartel to keep production levels unchanged.
Benchmark crude for July delivery was down 40 cents at $101.53 per barrel in electronic trading on the New York Mercantile Exchange.
Pamela Sampson in Bangkok contributed to this report.