Hurt by a steady drip-feed of negative news this week from rising Brexit uncertainty to risks spreading among Italian banks, investment managers sought shelter in the US dollar and gold, signalling a rocky start to the second half of the year.



MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent. For the week, it is set to fall 1 percent, its biggest weekly drop since June 19. Hong Kong stocks led losers with a fall of 0.9 percent.



Japan's Nikkei fell 0.4 percent.



"Brexit uncertainty, Italian bank risks, renewed US dollar strength and seasonal September quarter weakness could see more volatility in shares in the short term," Shane Oliver, chief economist at AMP Capital in Sydney wrote in a note to clients.



US-based funds invested in precious metals attracted the most money since February, adding $2 billion to these funds in the latest week, according to Thomson Reuters' Lipper data.



With the European economy threatened by Britain's decision to leave the European Union, investors are counting on the resilience of the US economy to support global growth.



Ahead of the closely-followed payrolls report later on Friday, US data published on Thursday was mostly positive.



US private payrolls increased more than expected in June as small businesses ramped up hiring, and fewer Americans applied for unemployment benefits last week.



The consensus forecast for Friday's non-farm payrolls data is for 175,000 jobs gain for June, according to a Reuters poll, but investors remained wary given the unexpected negative surprise in payrolls the previous month.



"I would say numbers around the consensus figure will be the most comfortable for markets," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.



"Anything below 100,000 will scare investors while reading above 200,000 could rekindle talk of a Fed rate hike even though I suspect people would not seriously expect the Fed to raise rates soon."



Though strong payrolls data would spark fresh speculation of a US rate increase later this year, it would also trigger a fresh round of currency weakness and likely policy tightening in emerging markets.



The British pound was steady for now at $1.2945, but it still stood just about a cent above its 31-year low of $1.2798 touched on Wednesday.



Having slipped 2.8 percent so far this week, it looks set to post its third straight week of losses.



The euro eased to $1.10775, having shed 0.3 percent on Thursday, not far from this week's low of $1.1029 set on Wednesday.



The yen was broadly flat on Thursday to 100.67 yen per dollar, coming within sight of retesting Wednesday's high of 100.20, as the Japanese currency is seen as a safe-haven at times of distress.



US bond prices retreated a bit on profit-taking after the 10-year yield hit a record low of 1.321 percent earlier this week. It last stood at 1.385 percent.



Meanwhile, Japanese bond yields plunged to fresh record lows.



Still, analysts expect US bonds to continue luring investors' funds escaping Europe.



Oil prices fell 5 percent to two-month lows on Thursday after the US government reported a weekly crude draw within analysts' forecasts that disappointed market bulls expecting larger declines.



Brent crude futures hit a two-month low of $46.15 per barrel on Thursday and last traded at $46.88.