LONDON – World shares limped toward their biggest weekly fall of the year on Friday, though investors took heart from a dip in government bond yields as the incoming Bank of Japan chief ruled out an early end to its super-easy monetary policy.

European share markets opened higher, with the pan region Euro Stoxx 600 up 0.4 percent though overnight falls in Asia and lower Wall Street futures prices Wall Street meant MSCI's main worldwide index was stuck in the red.

Europe's moves were partly helped by a pause in this month's sharp rise in global borrowing costs – a reversal of January's trend.

During a lower house confirmation hearing, Kazuo Ueda, who will take over as governor of the Bank of Japan (BOJ) in April, said ultra-low interest rates were still needed to support Japan's fragile economy, warning of the dangers of responding to cost-driven inflation with monetary tightening.

"Ueda is working hard to present himself as delivering continuity," said Sean Callow, senior currency strategist at Westpac. "At least to start with."

Japan's Nikkei share index closed up 1.1 percent, while its five-year government bond yield eased to 0.235 percent.

Ten-year Japanese bonds didn't trade on Friday due to thin liquidly, after breaching the upper limit of the BOJ's policy cap for two straight days. But the yen turned choppy as data also showed core consumer inflation hitting a 41-year high, keeping pressure on the BOJ to phase out its stimulus program.

Meantime, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8 percent, for a hefty weekly drop of 2.0 percent.

Wall Street was also pointing lower again having ended a topsy-turvy Thursday in positive territory for the first time in five sessions, albeit still on course for its worst week of the year.

Expectations US interest rates will rise meant the dollar index, which measures the top world currency against six of its main peers, was hovering at 104.71, just shy of a seven-week high of 104.78.

Investors were eyeing the release later of the US personal consumption expenditures (PCE) price index for January, the Federal Reserve's preferred inflation measure. The index is expected to be up 0.4 percent from a month earlier, compared with 0.3 percent the previous month.

On Thursday, an unexpected fall in new claims for unemployment and a revised uptick in the fourth-quarter PCE price index, suggested strength in the world's largest economy.

"The US dollar index should extend its rise towards 106 if today's US PCE deflators lift the US Treasury 2Y yield above the 4.5-4.75 percent Fed Funds Rate range," said analysts at DBS Bank.

Aaron Dunn, co-head of value equity at Eaton Vance, said the most obvious impact when the conflict in Ukraine broke out had been the sharp increase in oil and gas and agricultural prices. Notably though, most of those moves have been largely reversed.

"You have basically retracted a fair amount of the gains in most of the energy markets in the back half of 2022," Dunn said, highlighting that the slump in natural gas prices meant it was now replacing coal again in Europe.

In the bond markets, the key Treasury yield, or the cost for the US government to borrow in the international debt markets, eased to as far as 3.8590 percent, compared with the previous close of 3.8810 percent.

Benchmark European yields edged down too after Germany, the bloc's industrial power-house, said its economy shrank by slightly more than initially predicted in the fourth quarter of 2022.

Germany's 10-year government bond yield fell 3 basis points to 2.44 percent after stronger-than-expected PMI data earlier in the week had pushed it to its highest level since August 2011.

In the oil market, Brent crude futures rose 0.8 percent to $82.84 while US West Texas Intermediate (WTI) crude was also up 0.8 percent at $75.99.

Gold was fractionally higher at a spot price of $1,824.89 per ounce although it was on course for a fourth straight weekly drop.