Asian shares fell on Friday as disappointing U.S. manufacturing data raised concern that its economic recovery may not be as fast as thought, while the dollar remained firm as investors booked profits on gains in higher-yielding currencies.

European stock futures were down 0.9 percent while U.S. equity futures were 0.3 percent lower.

Investors were nervous ahead of U.S. non-farm payrolls, due at 8:30 a.m. EDT, fearing more disappointing news after an Institute for Supply Management report showed manufacturing growth was slower-than-expected in September.

Shares in Japan <.N225> skidded 2.5 percent with carmakers including Toyota and Nissan hurt by a slump in September U.S. car sales.

Worries about U.S. economic data overshadowed a surprise drop in Japan's unemployment rate and helped push five-year Japanese government bonds yields to a four-year low.

U.S. 10-year bond yields fell to 3.15 percent in Asia, their lowest level since May on the back of the weak data.

Trade across Asia was quieter than usual with markets in China, India and South Korea closed for public holidays.

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> fell 1.6 percent, although it is still up 56 percent this year, while the Thomson Reuters index of regional shares <.TRXFLDAXPU> was down 1.4 percent.

STONE COLD RECOVERY

If U.S. non-farm payrolls data shows more than an expected 180,000 job losses, it could renew fears about the strength of the economic recovery and bolster the dollar as a safe haven, traders said.

The dollar remained firm after the disappointing manufacturing data, which prompted investors to book profits on the higher-yielding Australian dollar and the New Zealand dollar.

The euro regained some ground to $1.4539, after hitting a three-week low at $1.4502 in early Asian trade.

David Watt, senior currency strategist, at RBC Capital in Australia said the U.S. manufacturing index played to the theme that, without stimulus from governments and policymakers, the formerly red-hot recovery is going stone cold.

Wal-Mart Stores Inc said it expected a slow recovery both in the United States and Asia.

Our business in the U.S. is very challenging right now ... some of the recent economic news is more pessimistic than expected, Wal-Mart Chairman Rob Walton told Reuters in an interview on Friday.

We think Asia probably will lead the recovery and we certainly see a recovery occurring in the not too distant future, but it will be slow I believe.

Shares of Japanese car makers came under pressure after data showed U.S. car sales slumped 23 percent last month after the end of the government's cash for clunkers program, which had briefly boosted vehicle sales.

Toyota Motor <7203.T> and Honda Motor <7267.T> shed more than 3 percent and concerns about the strength of the yen added pressure as Toyota President Akio Toyoda said it would be difficult for the auto giant to return to profit while the dollar was weak.

In Hong Kong, shares were down 2.3 percent, and new listing Glorious Property Holdings <0845.HK> skidded 20 percent in the morning of its debut -- the latest IPO in the city to be hit by dwindling appetite for new issues amid a flurry of new offerings.

Australia's benchmark S&P/ASX 200 index <.AXJO> fell 1.8 percent as investors reassessed recent gains. Mining giants BHP Billiton and Rio Tinto lost close to 3 percent after metal and gold prices fell overnight on concerns about weak demand.

Gold edged back above $1,000 an ounce by Friday afternoon.

U.S. crude oil futures fell about 1 percent toward $70 a barrel after Washington said talks between Iran and six major world powers over Tehran's nuclear program were productive and opened the door to better ties.

(Additional reporting by Harry Suhartono in Singapore and Anirban Nag in Sydney; Editing by Jan Dahinten)

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