Japan's Nikkei 225 slipped 0.2% to 21,377.72. Australia's S&P/ASX 200 lost 0.1% to 6,293.30. South Korea's Kospi gained 0.3% to 2,108.04. Hong Kong's Hang Seng gained 0.9% to 28,543.86, while the Shanghai Composite gained 1.5% to 2,898.34 after briefly trading 2% higher.
Tensions between the world's two largest economies dragged stocks on Wall Street lower ahead of a Friday deadline when the United States said it would impose more tariffs on Chinese goods. The worries about trade this week have stifled what has been the hottest start to a year for U.S. stocks in decades.
"The U.S. may deliver on its threat of higher tariffs on Chinese products and China may reciprocate. The markets maybe priced in all this, but a knee-jerk selling looks inevitable," says Prakash Sakpal, economist at ING.
China has threatened to retaliate if President Donald Trump goes ahead with the tariff hikes, adding to the heated rhetoric from both sides that was shaking stock markets around the world. Negotiators from both countries met Thursday and are continuing to meet Friday.
The S&P 500 fell 0.3% to 2,870.72. The benchmark index has essentially given back all its April gains, though it's still up 14.5% for the year. The Dow Jones Industrial Average dropped 0.5% to 25,828.36. It was down nearly 450 points in morning trading before regaining much of the ground it lost.
The Nasdaq composite slid 0.4%, to 7,910.59. The Russell 2000 index of small company stocks gave up 0.3%, to 1,570.06. ENERGY: Benchmark U.S. crude rose 44 cents to $62.14 a barrel in electronic trading on the New York Mercantile Exchange. It dropped 0.7% to settle at $61.70 per barrel overnight. Brent crude, the international standard, added 34 cents to $70.72 a barrel.
CURRENCIES: The dollar inched up to 109.88 Japanese yen from 109.77 yen. The euro strengthened to $1.1230 from $1.1216.
Follow Yuri Kageyama on Twitter https://twitter.com/yurikageyama
On Instagram https://www.instagram.com/yurikageyama/?hl=en