According to analysts, investors in Asian equities（普通股）were taking profits on gains made over the past few months, but were also on edge over the apparent deterioration of stability in Iraq this week.

Sean Darby an investment strategist with Nomura Securities, says markets went through a correction as investors re-evaluated their risks.

"The economic data has actually surprised possibly more on the upside so in contrast to the market performance, those data points have actually been very good. But the markets have over-reached themselves and the news from Iraq started to unsettle some international investors."

Mr. Darby says investors are worried about damage to Asian exporters from a weaker U.S. dollar. For example, prices of U.S. consumer goods manufactured in Japan and South Korea could become more expensive as the Japanese yen and South Korean won appreciate against the dollar.

Japan's market felt the pinch（壓力）, with the Nikkei 225 finishing Friday at 10,167, more than four percent lower than a week ago. But despite worries, South Korea's Kospi index reached a 17-month high this week. By Friday morning, however, the rally had subsided and the Kospi closed at 809, gaining just more than a half point on the week.

Early-week selling on Hong Kong's stock market was also short-lived, when the Hang Seng index surged by more than two percent on Thursday. The Hang Seng ended at 12,203 Friday, 12 points lower than a week ago.

Despite the correction this week, Mr. Darby predicts investors will continue to move assets back into Hong Kong shares.

"Hong Kong has had an unusual performance because the interest rates here have actually been going down and the reason for that is there's been very strong inflow of portfolios（有價(jià)證券）into Hong Kong."

Taipei's Taiex index recovered from selling earlier in the week and closed Friday 12 points down from last week's end at 6,044.