The dollar and a gauge of global equity markets fell on Friday as a battle on Wall Street between hedge funds and retail investors and a row over COVID-19 vaccine supply in Europe cooled risk appetite.
Disappointing vaccine data from Johnson & Johnson also hurt sentiment but the focus remained on the assault of retail traders using online forums to force hedge funds to reverse short positions - their bets that stocks will fall.
Shares of GameStop Corp, AMC Entertainment Holdings Inc and BlackBerry Ltd surged after Robinhood and Interactive Brokers said they planned to ease restrictions after imposing buying halts on Thursday.
The trading frenzy comes after central bank and government stimulus have propelled stock markets to record highs in recent weeks, encouraging the entry of a wave of retail investors who have pushed trading volumes to new heights.
"There's fear in terms of the volatility," said Derek Halpenny, head of research for global markets at MUFG. "Specific trades in pockets of the market can spread into the broader market."
"Any hedge fund will be carefully looking at all their shorts after this week and regulators will look very carefully at collective retail trading," Deutsche Bank analysts said.
MSCI's benchmark for global equity markets fell 1.23% to 646.48, while Europe's broad FTSEurofirst 300 index dropped 1.59% to 1,529.7.
On Wall Street, the Dow Jones Industrial Average fell 1.16%, the S&P 500 lost 1.10% and the Nasdaq Composite dropped 1.11%.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1% to post a weekly loss of 4.4%. Japan's Nikkei fell 1.9%, recording its first weekly loss of the year.
Delays in COVID-19 vaccine production have snowballed into a spat between Britain, the European Union and drugmakers over how best to direct limited supplies.
AstraZeneca offered eight million more doses of its COVID-19 vaccine to the European Union after it unexpectedly announced cuts in supplies last week. But the bloc said that was far short of what was originally promised, an EU official told Reuters on Friday.
New variants of the novel coronavirus have also prolonged lockdowns and delayed expectations of an economic rebound.
The U.S. dollar retreated from its highest level since mid-November against the yen as investors rebalanced portfolios for month-end. The greenback slid 0.45% and was slightly lower against an index of currencies, falling 0.052%.
Bitcoin jumped as much as 14% to a two-week high after Tesla Inc chief Elon Musk tagged the cryptocurrency in his Twitter biography.
French 10-year government bond yields, which move inversely to price, rose four basis points after France's gross domestic product contracted less than expected in the fourth quarter of 2020.
U.S. Treasury yields rose on Friday, in line with Europe, after data showed inflation perked up last month, while employment costs rose, suggesting the world's largest economy is on the mend from the devastating effects of the pandemic.
The U.S. yield curve steepened as a result of the increase in long yields, with the spread between 2-year and 10-year notes hitting 98.20 basis points, the widest in about a week.
The 10-year U.S. Treasury note rose 3.8 basis points to yield 1.0808%.
Oil prices edged up as demand concerns caused by new coronavirus variants and slow vaccine rollouts offset a cut in Saudi Arabian oil supply and falling U.S. oil inventories.
Brent crude futures rose $0.37, to $55.9 a barrel. U.S. crude futures gained $0.09, to $52.43 a barrel.
Spot gold prices rose 0.90% to $1,856.91 an ounce.