The Shanghai Composite Index lost 0.2 percent to 3,275.01 and Hong Kong's Hang Seng was off 0.8 percent at 27,629.68. Economists had expected another 0.1 percent uptick.
The U.S. dollar inched up against the Japanese yen and the Swiss Franc on Friday, erasing earlier losses, after Russian Foreign Minster Sergei Lavrov said there was a Russian-Chinese plan to defuse tensions between the United States and North Korea. The comments follow reports that the North has mastered a technology needed to strike the United States with a nuclear missile. Ten-year USA yields dropped 4 basis points to 2.242 percent and German equivalents fell 3 bps to 0.44 per cent, their lowest since 30 June.
"The market's dent only lasted for a week in April when tension rose between them after North Korea launched a missile". South Korea's Kospi fell 0.5 percent. Both were coming off record highs.
S&P 500 e-minis were down 4.5 points, or 0.18 percent, with 209,543 contracts traded.
The Japanese yen hit an eight-week high against the US dollar, and USA -traded Nikkei stock futures dropped 2 percent to their lowest since mid May. The number of people quitting their jobs also dropped.
The Standard & Poor's 500 index fell 24 points, or 0.9 percent, to 2,450. It was on course for an over 5 percent weekly rise, its highest such gain since July 2016.
The dollar weakened after news that US producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.
"More likely than anything else, the price action was a function of an overextended US equity market that has been in need for a healthy correction off record highs", LMAX Exchange analysts said in a morning note.
"Most certainly the market was hoping for some upbeat assessment from Fed Bill Dudley but... it was Trump talk that trashed the equity markets, nothing more nothing less", said Oanda's Stephen Innes. Still, he said, "the Washington, D.C., bedlam and North Korea's saber-rattling is muddying the broader landscape". Yesterday, the TICK opened at around 900-a reading of 1,000 or more means pretty severe selling pressure-and then headed higher throughout the day.
Traders work on the floor of the New York Stock Exchange in New York, on Friday. It added 39 cents to $49.56 a barrel on Wednesday. Brent crude, used to price worldwide oils, gave up 22 cents to $51.92 in London.