Asian shares suffered a fresh bout of the shakes on Friday as tough words on trade from China's media drowned out upbeat news on the US economy and corporate earnings.

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Shanghai stocks led the way into the red amid the growing fallout from President Donald Trump's move to block China's Huawei Technologies from buying vital American technology.

The sense of foreboding grew as the Communist Party's People's Daily used a front-page commentary to evoke the patriotic spirit of past wars, saying the trade war would never bring China down.

"It is hard to get too excited as the news flows in the trade front points to an escalation rather than ease in tensions," said Rodrigo Catril, senior FX strategist at National Australia Bank.

"Many commentators are suggesting the decision on Huawei and other Chinese telecos effectively means the President has taken the 'nuclear option' and it has now moved towards a 'fully-fledged' tech war with China."

Shanghai blue chips fell 2.1 percent, while the offshore yuan eased past 6.9400 per dollar for the first time since November, 2018.

MSCI's broadest index of Asia-Pacific shares outside Japan lost early gains to fall 0.7percent, leaving it at 15-week lows and down 2.6 percent for the week.

Japan's Nikkei did manage to bounce 0.9 percent, while the main Australian index climbed to an 11-year peak as higher commodity prices boosted miners.

But E-Mini futures for the S&P 500 shed 0.36 percent and European stock futures pointed to opening losses.

Sentiment had been briefly soothed overnight by better US economic news, with US housing starts surprisingly strong and a welcome pickup in the Philadelphia Federal Reserve's manufacturing survey.

Upbeat results from Walmart burnished the outlook for retail spending, though the giant chain also warned that tariffs would raise prices for US consumers.

As the earnings season winds down, of the 457 S&P 500 companies reporting about 75 percent have beaten profit expectations, according to Refinitiv data.

The Dow ended Thursday with gains of 0.84 percent, while the S&P 500 added 0.89 percent and the Nasdaq 0.97 percent.

POUND GROUND DOWN

The chillier tone in Asia helped Treasuries recoup early losses as the session wore on, with the 10-year futures contract firming 7 ticks.

The US dollar lost a little of its shine on the safe-haven yen to stand at 109.64 from a top of 110.03. Against a basket of currencies, it was a shade softer at 96.824.

Yet the euro could make no ground and held at $1.1173, down 0.5 percent for the week so far.

Sterling was one of the worst performers as Britain's Prime Minister Theresa May battled to keep her Brexit deal, and her premiership, intact amid growing fears of a disorderly departure from the European Union.

The pound touched a three-month low of $1.2783 and was down a hefty 1.6 percent for the week so far.

Also under pressure was the Australian dollar, losing 1.5 percent for the week to $0.6890 as investors piled into bets that interest rates would be cut in June.

The main mover in Asia was cyber currency Bitcoin which tumbled over 20 percent at one stage for no discernible reason. It was last down 7 percent.

In commodity markets, spot gold steadied at $1,287.34 per ounce as risk sentiment soured.

Oil futures firmed into a fourth session as rising tensions in the Middle East stoked fears of potential supply disruptions.

US crude was last up 14 cents at $63.01 a barrel, while Brent crude futures rose 12 cents to $72.74.

First Published:May 17, 2019 6:34 AM IST