Asian shares tracked Wall Street lower, bonds extended gains and gold hit a fresh record on Friday, with signs of credit stress at US regional banks putting investors on edge.

In Hong Kong, the benchmark Hang Seng Index fell 36 points, or 0.14 percent, to open at 25,851.

Across the border, the benchmark Shanghai Composite Index was down 0.11 percent at 3,912 while the Shenzhen Component Index opened 0.2 percent lower at 13,060.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, was down 0.36 percent at 3,026.

Overnight, one of the regional US banks, Zions, sank 13 percent after disclosing it would take a US$50 million loss in the third quarter on two loans from its California division. Western Alliance's stock slumped 11 percent after it initiated a lawsuit alleging fraud by Cantor Group V.

"While the recent issues of the two lenders seems well contained, where there is smoke there is often fire and the remedy of the 2023 crisis has created a tinderbox for another banking flare-up," said Tony Sycamore, analyst at IG.

The two developments pummelled US banking stocks and weighed on the US dollar to the benefit of the yen and the Swiss franc. Two-year US Treasury yields hit a fresh three-year trough of 3.4040 percent on Friday as investors priced in at least two more quarter-point rate cuts from the Federal Reserve this year.

The flight to safety saw gold hit a record of US$4,378 per ounce, although it ran into some profit-taking and was last flat. Even so, the bullion is set for a weekly gain of 7.6 percent, its biggest since early 2020. Silver also hit a new peak.

Both S&P 500 futures and Nasdaq futures lost 0.3 percent ahead of more earnings from US regional banks later in the day. European stock futures fell 0.7 percent percent while FTSE futures dropped 0.9 percent.

Sentiment in equities has also taken a hit due to rising trade tensions between China and the United States. China on Thursday accused the US of stoking panic over its rare earth controls, rejecting a White House call to roll back the curbs.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.9 percent, taking the week to negative territory. Japan's Nikkei lost 1 percent in early trading as its banking index tumbled.

The credit worries and rate cut bets undermined the US dollar, which was on track for a weekly loss of 0.6 percent against its major peers to 98.24, the lowest in 10 days. (Reuters/Xinhua)