Asian shares held on to this week's gains Friday, while the dollar stepped back from seven-month highs on concerns of higher U.S. borrowing costs and slower global economic growth.

MSCI's broadest index of Asia-Pacific shares outside Japan was almost flat barely holding on to gains of 1.7 percent so far this week.

Japan's Nikkei retreated from three-month highs hit on Thursday, falling 0.5 percent as the dollar dipped versus the yen on route to posting its fifth consecutive week of gains.

Mainland Chinese shares also held flat, with Shanghai composite .SSEC staying near a three-month high struck on Tuesday.

Late on Thursday, China’s central bank reduced its Standing Lending Facility (SLF) interest rates, another policy tool to inject cash into banks, with the seven-day rate cut to 3.25 percent and the overnight rate to 2.75 percent from 5.5 percent and 4.5 percent, respectively.

According to Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management, "Many economies in Asia and emerging markets are still not doing that good. Demand for raw materials remain very weak."

Commodity prices continued to drop with copper near 6-1/2-year lows standing at $4,598.50 a ton on Thursday, down 4.7 percent so far this week.

USD

The dollar was firm at 122.895 yen after sliding 0.6 percent on Thursday, breaking a four-day winning run. The Bank of Japan's decision not to ease monetary policy any further put slight pressure on the U.S. currency, though it was still could end the week with a 0.2 percent gain.

The euro was little changed at $1.0718 after gaining 0.7 percent overnight.