World stocks were set for a third straight week of losses on Friday and commodity currencies took another drubbing as oil prices fell back below $30 US, keeping alive concerns about global growth.

European stocks fell more than one per cent, heading back towards Thursday's 13-month lows, while Asian shares skidded to 3-½ year lows.

Oil prices, which posted their first significant gains for 2016 on Thursday, came under fresh selling pressure as the prospect of additional Iranian supply loomed over the market.

Brent crude fell three per cent to $29.86, heading for a weekly loss of more than 10 per cent. U.S. crude fared even worse, sliding almost five per cent to $29.75, and was set for a weekly decline of 10 per cent. The collapse in oil prices has spooked financial markets as investors worry about the health of the global economy, with a slowdown in China and volatility in its markets making for a nervous start to the year.

"It's been another immensely volatile week," said Philip Shaw, chief economist at Investec in London.

The Shanghai Composite lost 3.5 per cent, while the CSI300 tumbled 3.2 per cent. That put the former on track for a nine per cent loss for the week, and the latter for a decline of 7.2 per cent.

Chinese shares extended their losses after data showed new yuan loans in December were well below the previous month's lending, and broad M2 money supply growth also slowed, with both missing expectations.

China will publish a host of data on Monday and Tuesday, including fourth quarter gross domestic product.

U.S. retail sales data today

U.S. retail sales data due later on Friday will also be on investors' radar as they try to gauge the likelihood of the Federal Reserve raising interest rates again in March.

The combination of sliding oil prices and China concerns delivered another knock to commodity-linked currencies. The Canadian dollar fell to $1.4521 against its U.S. counterpart, its lowest level since early 2003, while the Australian dollar fell to a seven-year low at $0.6880.

The U.S. dollar was weaker against the euro and the yen, helping push the dollar index down 0.18 per cent to 98.895.

"It's another risk-off day," said Chris Scicluna, head of economic research at Daiwa Capital Markets. "We had an awful session in Asia and that has spilt over into Europe."

Worries that a depreciating Chinese yuan could spark competitive currency devaluations across the region have also hit global shares this month.

On Friday, the yuan, posted modest gains. That put the Chinese currency 0.1 per cent up on the week, but it was still around 1.4 per cent weaker against the dollar than it started the year and has lost nearly 5 per cent since August.