Asian shares inched higher on Friday with broader gains capped by investor caution as concerns about China's economy and global trade weighed on sentiment while stronger-than-expected United States (US) Gross Domestic Product (GDP) data pushed the dollar up.
MSCI's broadest index of Asia-Pacific shares outside Japan was up less than 0.1 per cent in early trade.
Japan's Nikkei 225 gained 0.8 per cent, helped by the weaker yen, while Australian shares added 0.6. per cent.
Investors will be looking to the opening of Chinese markets after the Shanghai Composite index posted its strongest monthly gain in nearly four years in February.
Gains in Chinese shares may be further boosted after global index provider MSCI said it would quadruple the weighting of mainland shares in its global benchmarks later this year, potentially drawing more than $80 billion of fresh foreign inflows to the world's second-biggest economy.
US President Donald Trump on Thursday fuelled concerns over trade talks between the US and China, warning that he could walk away from a trade deal with China if it were not good enough.
That contrasted with subsequent comments from White House economic adviser Larry Kudlow on Thursday, who called progress in the negotiations “fantastic” and said the countries were ”heading towards a remarkable, historic deal.”
Mixed messages on trade combined with the collapse of the summit between US President Donald Trump and North Korean leader Kim Jong-un on denuclearization, and data from China showing slowing factory activity to pressure US stocks.
“News that President Trump walked out of the meeting with Supreme Leader Kim, because the two sides couldn't reach an agreement over North Korea's nuclear disarmament, dashed hopes for an easing in geopolitical tensions,” analysts said.
South Korea's financial markets are closed Friday for a public holiday.
Better-than-expected US economic growth in the fourth quarter was not enough to lift Wall Street on Thursday. Gross domestic product rose 2.9 per cent for the year, just shy of the 3 per cent goal set by the Trump administration.
The Dow Jones Industrial Average fell 0.27 per cent to 25,916 points, the S&P 500 lost 0.28 per cent to 2,784.49 and the Nasdaq dropped 0.29 per cent to 7,532.53.
The US GDP data, however, did help lift yields on benchmark 10-year Treasury notes to 2.7222 per cent on Friday from a US close of 2.711 per cent on Thursday.
Dallas Federal Reserve Bank President Robert Kaplan said on Thursday that it will take time to see how much the US economy is slowing, supporting views of the Fed's rate-hike holiday at least through to June.
Nevertheless, the two-year yield, sensitive to expectations of higher Fed fund rates, ticked up to 2.5182 percent from a US close of 2.512 per cent.
The dollar also inched higher on the US data, adding 0.06 per cent against the yen to 111.44. The greenback hit its highest point this year against the Japanese currency on Thursday .
In commodity markets, US crude crept up 0.05 per cent at $57.25 a barrel, and spot gold inched up to$1,313.09 per ounce.