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 The renewed aversion to risky assets pushed the Japanese yen to
2-1/2-year high against the euro. Sterling dipped as summit talks on
changes in Britain's European Union membership dragged on through
the night.
Brent futures fell 57 cents to $33.71 a barrel after ending
the previous day down 22 cents. A record buildup in U.S. crude
stockpiles stoked concern about global oversupply, outweighing moves
by oil producers, including Saudi Arabia and Russia, to cap output.
The pan-European FTSEurofirst 300 was down 0.7 percent at 1,284.84
points, though the index stayed on course for its best week since
January 2015. Britain's FTSE 100 was down 0.3 percent and U.S.
stock futures pointed to a weak start on Wall Street.
The declines tracked Asian shares, which slipped from near
three-week highs.
Assets perceived as safe havens did well, with German 10-year Bund
yields falling 3 basis points to 0.18 percent. Ten-year U.S. T-note
yields <US10YT=RR> fell 2 basis points to 1.73 percent.
"The recovery in risk markets is still fragile," said BNP Paribas
rate strategist Patrick Jacq.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5
percent and Japan's Nikkei dropped 1.4 percent. On the week,
however, they were up about 4 percent and 7 percent, respectively.
The weekly jump came after gains in oil eased some of the deflation
concerns in the developed world.
Oil prices rose more than 14 percent in the three days to Thursday
after Saudi Arabia and Russia, supported by other exporters
including Venezuela and Iraq, moved to freeze oil output at
January's levels. Iran endorsed the plan without commitment on
Wednesday.
If approved, it would be the first such agreement in 15 years among
the Organization of the Petroleum Exporting Countries and non-OPEC
members.
Iraqi Oil Minister Adel Abdul Mahdi said on Thursday that talks
would continue between both camps to find ways to restore "normal"
oil prices.
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But data showing U.S. crude inventories rose by 2.1 million barrels
last week, to a peak of 504.1 million barrels - the third week of
record highs in the past month - held prices down.
BREXIT BACKDROP
At the EU summit, British Prime Minister David Cameron urged EU
leaders to agree a deal that would allow him to campaign in a June
referendum to stay in the EU. Fellow leaders and diplomats said an
agreement seemed possible on Friday, but some said outstanding
issues were proving tough to resolve..
Sterling was down 0.3 percent against the dollar.
"By the end of today, we should have a decent idea whether the UK is
set to have a referendum on EU membership this year," said Simon
Smith, chief economist at FxPro. "This matters for sterling, which
has certainly shown strong signs of concern so far this year."
The yen reached its strongest since June 2013 against the euro
at 125.095. The dollar was flat against a basket of major
currencies.
Spot gold was down 0.9 percent at $1,221.42 an ounce.
(Additional reporting by Dhara Ranasinghe, editing by Larry King and
John Stonestreet)
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