Asian stocks on Friday slid for a fourth straight session, driven by expectations of tighter financial regulation ahead of the weekend G20 meeting and uncertainty about the global economic recovery.

Part of the weakness was attributable to profit-taking after a powerful rally in risky assets on Monday on the back of China's decision to unpeg the yuan.

However, differences among G20 leaders ahead of a summit in Toronto over how to secure the economic recovery caused investor concern, particularly with leading indicators reflecting a slowdown ahead.

There is some form of a renewed crisis in confidence, said Patrick Yiu, an analyst at CASH Asset Management in Hong Kong. We're likely to see a pullback because of this weak sentiment, but should find support soon.

Japan's Nikkei share average led equity market declines in Asia, falling 1.5 percent. Index heavyweights such as Fanuc and Canon saw their shares drop 3.9 percent and 4.1 percent, respectively.

A close below the 25-day moving average for the Nikkei would be a negative short-term signal for Japanese stocks.

The MSCI index of Asia Pacific shares outside Japan slipped 0.5 percent, dragged down by the technology and resource-related sectors.

For the week, the index was largely unchanged. In a reversal of sectoral performance for most of the year, the industrial and materials segments, which includes mining stocks, outperformed, while IT was the biggest underperformer.

TOUGHER RULES FOR BANKS?

Australian miners such as BHP Billiton were down. The industry got a boost on Thursday after a dramatic slide in support for the government, largely because of a 40 percent tax on mining companies, ushered into power a new prime minister for Australia.

Hong Kong's Hang Seng reversed earlier losses to trade flat, after HSBC was the biggest drag on the market, down 0.8 percent.

Banks in the United States could face tougher curbs on trading but would be able to hold limited hedge fund positions under a proposal unveiled by Senate Democrats on Thursday.

U.S. stocks ended about 1.7 percent lower overnight and have dropped nearly 4 percent this week, underperforming European and Japanese shares by a wide margin. Retailers and banks were under pressure throughout the session.

With world leaders increasingly speaking about fiscal austerity, investors have seriously questioned the implications for growth.

Indeed, U.S. new home sales plunged by a record 33 percent in May from April and the Baltic Exchange's sea freight index, which is used as a leading economic indicator, was down 39 percent so far in June, on track for the biggest monthly decline since October 2008.

Goldman Sachs economists said in a note that global growth will slow to a 4 to 4.5 percent pace from a 5 to 5.5 percent quarter-on-quarter annualized pace in the first half in the second half.

Currencies were hemmed into tight trading ranges on Friday, with the euro at $1.2328, well off a four-year low of $1.1875 hit on June 7.

Beijing set the yuan's daily mid-point at the highest since the July 2005 revaluation, pushing it up 0.6 percent this week. However, market reaction was limited, with many traders resigned to the view that the yuan's appreciation in the spot market will be slow and managed. (Additional reporting by Kelvin Soh; Editing by Jan Dahinten)

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