The losses reversed a rally across world markets the previous day as analysts warned that the legal wrangling could compound volatility and throw trade talks between Washington and other governments.

While the tariffs have been stalled and are set to go through the courts -- and possibly end up at the Supreme Court -- there are expectations that the US president will find other means to implement them.

The US Court of International Trade ruling on Wednesday barred most of the tariffs announced since Trump took office, saying that he had overstepped his authority -- a decision he labelled "horrible" and should be "quickly and decisively" reversed for good.

"Backroom 'hustlers' must not be allowed to destroy our Nation!" he wrote on his Truth Social platform.

A separate ruling by a federal district judge in Washington, DC also found some levies unlawful as well, giving the administration 14 days to appeal.

Observers said the latest developments have led to speculation about trade negotiations, including those between the United States and European Union, and a deal it has already struck with Britain.

But Kevin Hassett, director of the National Economic Council, told Fox Business that "hiccups" sparked by the decisions of "activist judges" would not affect negotiations and that three agreements were close to finalisation.

National Australia Bank's Rodrigo Catril said after the appeal court decision that "Trump's trade agenda remains alive and kicking with the legal battle adding yet another layer of uncertainty".

He added that the judges could still rule against the White House.

"But it is probably worth emphasising that the president has other avenues to impose tariffs, so our view here is that the court case is just another layer of uncertainty/complication but it does not derail Trump's tariff agenda," Catril said.

"The ongoing shift in US trade policy is creating a cloud of uncertainty and now the legal battles are making the outlook even cloudier.

"The only thing that looks more certain is more uncertainty, which is set to lead to a further pullback in investment decision and hiring."

Meanwhile, US Treasury Secretary Scott Bessent told Fox News that negotiations with China were "a bit stalled" and Trump might need to speak to President Xi Jinping, weeks after the economic superpowers agreed a detente in their trade war.

He added that "given the magnitude of the talks, given the complexity, that this is going to require both leaders to weigh in with each other".

Hong Kong and Tokyo were off more than one percent each, while Shanghai, Seoul, Manila, Mumbai and Bangkok also sank.

Sydney and Wellington edged up with London, Paris and Frankfurt.

The weak performance followed a tepid day on Wall Street, where all three main indexes ended just slightly higher, with sentiment also dented by data showing the US economy contracted in January-March, albeit at a slower pace than first thought.

Disappointing readings on jobless benefits and pending home sales added to the more downbeat mood, with investors also on edge over elevated bond yields and Trump's plans to ramp up the budget deficit.

On currency markets the yen strengthened after figures showed inflation in Tokyo -- a barometer for the rest of Japan -- came in above forecasts this month, ramping up expectations the country's central bank will hike interest rates in July.

- Key figures at around 0810 GMT -

Tokyo - Nikkei 225: DOWN 1.2 percent at 37,965.10 (close)

Hong Kong - Hang Seng Index: DOWN 1.2 percent at 23,289.77 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,347.49 (close)

London - FTSE 100: UP 0.5 percent at 8,762.10

Euro/dollar: DOWN at $1.1340 from $1.1368 on Thursday

Pound/dollar: DOWN at $1.3480 from $1.3494

Dollar/yen: DOWN at 144.00 yen from 144.19 yen

Euro/pound: DOWN at 84.12 pence from 84.22 pence

West Texas Intermediate: UP 0.3 percent at $61.13 per barrel

Brent North Sea Crude: UP 0.2 percent at $64.29 per barrel

New York - Dow: UP 0.3 percent at 42,215.73 (close)

dan/pst

NATIONAL AUSTRALIA BANK

INDEX CORP.

Dow