Attention in financial markets this week has been on the US-China trade talks which culminated in a framework agreement that would remove Chinese export restrictions on rare earth minerals and allow Chinese students access to US universities.

"We made a great deal with China. We're very happy with it," said US President Donald Trump. Markets though were guarded in their response, awaiting fuller, concrete details of the agreement and remained wary of another flare up.

Trump also said the US would send out letters in one to two weeks outlining the terms of trade deals to dozens of other countries, which they could embrace or reject, adding yet another dose of uncertainty in the markets.

"The US China deal really just leaves the tariffs in place after they've been cut back following the Geneva meeting, so it doesn't really change things," said Shane Oliver, head of investment strategy and chief economist at AMP Capital.

"Ultimately the trade tension is yet to be resolved between the US and China."

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.3 percent lower in early trading after hitting a three year-high on Wednesday. Japan's Nikkei slipped 0.7 percent, while US and European stock futures fell.

China's blue-chip stock index fell 0.37 percent, moving off the near three-week top it touched in the previous session. Hong Kong's Hang Seng index was down 0.74 percent, also inching away from Wednesday's three-month high.

Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit US assets, especially the dollar, as they worried about rising prices and slowing economic growth.

The euro, one of the beneficiaries of the dollar's decline, rose to a seven-week high and was last at $1.1512. The Japanese yen was 0.4 percent firmer at 144.03 per dollar.

That pushed the dollar index, which measures the US currency against six other key rivals, to its lowest level since April 22. The index is down 9 percent this year.

Data on Wednesday showed US consumer prices increased less than expected in May as cheaper gasoline partially offset higher rents, but inflation is expected to accelerate in the coming months on the back of the Trump administration's import tariffs.

The soft inflation report led Trump to renew his call for the Federal Reserve to push through a major rate cut. The president has been pressing for rate cuts for some time even as Fed officials have shrugged off his comments.

Traders are pricing in a 70 percent chance of a quarter-point reduction in the Fed policy rate by September. Policymakers are widely expected to keep rates unchanged next week.

AMP's Oliver said the higher prices will flow through either in the form of higher inflation or lower profit margins.

"I suspect it's probably going to be a combination of the two. Therefore, it makes sense for the Fed to wait and see what happens rather than rushing into a rate cut."

In commodities, oil prices were pinned at two-month highs, close to $70 a barrel, on worries of supply disruptions in the Middle East after Iran said it will strike US bases in the region if nuclear talks fail and conflict arises with Washington.

Gold prices also got a boost from safe-haven flows, with spot gold up 0.5 percent at $3,370.29.