A man rubs his eyes in front of a board showing stock indices outside of a brokerage in Tokyo on Friday. (Kim Kyung-Hoon/Reuters)

Most Asian markets fell Friday as a weaker-than-expected U.S. jobs report signalled more pain ahead for the world's largest economy.

Losses across Asia were somewhat tame compared to Wall Street, where markets pulled sharply lower. Oil prices edged higher after tumbling overnight, while the dollar was flat against the yen.

Optimism about the U.S. economy, a critical market for Asian-made goods, buckled after the government said employers slashed 467,000 jobs in June. That was far worse than the 363,000 that economists predicted and marked the first increase in monthly jobs losses since January. At the same time, the unemployment rate hit 9.5 per cent, the highest since 1983.

Investors have sent markets surging in recent months after the global economy flickered to life as companies began restocking their inventories and international trade picked up modestly.

But the dreary news about America's labour market just reinforced worries that a strong recovery in the U.S. economy, even if the recession officially ends this year, was unlikely anytime soon.

"The fundamentals of the economy are still not sound," said Arjuna Mahendran, head of Asian investment strategy at HSBC Private Bank in Singapore. "You're going to see less and less of these green shoots."

Equity markets fall

Mahendran said equity markets could fall between 15 per cent and 20 per cent in the coming months.

Asian markets, after starting in the red, managed to trim some of their losses.

Japan's Nikkei 225 stock average dropped 60.08, or 0.6 per cent, to 9,816.07, and Hong Kong's Hang Seng was down 8.57 points, or 0.1 per cent, to 18,168.44.

Australia's benchmark fell 1.4 per cent, and Singapore's main index was down 0.9 per cent.

In Korea, the Kospi rebounded to close up 0.6 per cent. India's Sensex also turned around, adding 0.4 per cent.

China's Shanghai Composite index was largely flat.

Despite recent losses, global markets just wrapped up one of their strongest quarters in years. India, China and other emerging markets were among the strongest performers as investors' appetite for growth and riskier assets returned.

For the second quarter, global investors channelled a whopping $26.5 billion U.S. into funds that focus on equities in developing market, according to a survey by EPFR Global, a Boston-based firm that tracks global fund flow data. That exceeded the previous record for a single quarter, the $22.4 billion such funds attracted in the fourth quarter of 2007.

Overnight on Wall Street, the Dow Jones industrials lost 223.32, or 2.6 per cent, to 8,280.74, the lowest close since May 22. It was the average's worst day since April 20. The Standard & Poor's 500 index fell 26.91, or 2.9 per cent, to 896.42 and the Nasdaq composite index fell 49.20, or 2.7 per cent, to 1,796.52.

Meanwhile, in Toronto, the TSX composite index was down 129 points to close at 10,245 on Thursday.

U.S. markets will be closed Friday in observance of the Independence Day holiday. Wall Street futures advanced moderately.