European and world shares fell on Friday but were set for a weekly gain, and the dollar pushed the euro off its recent five-month high, as investors finished a busy week without much more clarity on the big market questions than they had at the start.

MSCI's all country world share index was last down 0.21% with Europe's STOXX 600 0.8% lower in morning trade after Asian shares had dropped a similar amount earlier in the day. Wall Street slid overnight, and S&P 500 futures were down around 0.4%.

On the week, however, all are slightly higher, with the mood somewhat less febrile than it was earlier in March when markets were dominated by fear that policy uncertainty in the United States, particularly regarding tariffs, would push the world's largest economy into recession.

While those fears have not gone away, central banks were in the spotlight instead this week and the U.S. Federal Reserve, the Bank of Japan and the Bank of England all held rates steady.

Though with the main questions for markets being matters of fiscal and geopolitical policy, policymakers too were left with little to say other than to emphasise what Fed chair Jerome Powell called the "unusually elevated" uncertainty.

Investors will now focus on the details of the Trump administration's April 2 reciprocal tariffs which remain unclear, while reports of Israeli airstrikes on Gaza and a huge blast from a Ukrainian drone attack on a Russian military airfield were a reminder of rising geopolitical tensions pushing investors towards safe haven assets.

On top of that, Britain's Heathrow Airport, the world's fifth busiest was shut after a huge fire at a nearby electrical substation, investors are reassessing bets on Turkey's turnaround story after the long-feared detention of President Tayyip Erdogan's main political rival earlier in the week, and with Germany's massive fiscal splurge set to pass the country's Bundesrat upper house of parliament on Friday, the focus is now turning to how quickly and where the money will be spent.

That tectonic shift in Germany alongside fears of the U.S. recession have caused a dramatic shift in markets, with shares in Europe and Asia outperforming the U.S., particularly once loved tech stocks, and the euro surging. While those moves slowed this week, many analysts think the shift will continue.

"When leadership changes in markets after three years of one directional trades it doesn't disappear in three months," said Manish Kabra, multi-asset strategist and head of U.S. equity strategy at Societe Generale.

"The point is this is rotation in currencies and in equities both between regions and within the U.S."

The dramatic recent moves in currencies, which have seen the dollar weaken against most peers with the euro and Japanese yen standing out, also have been calmer in recent days.

The euro was at $1.0835 , down marginally on the day and the week, but after finishing February at $1.0375 and hitting a five-month high of $1.0955 earlier this week the bigger picture narrative is still one of euro strength.

Likewise, the yen was weaker on the day at 149.50 per dollar. Still, the yen is up 5% this year on expectations that the BOJ will hike rates again in 2025.

Data on Friday showed Japan's core inflation hit 3.0% in February and an index stripping away the effect of fuel rose at the fastest pace in nearly a year, a sign of broadening price pressure that reinforces market expectations of further hikes.

"Although Governor Ueda made much of the risks surrounding U.S. trade policy on Wednesday, we think he’s just hedging his bets - considering it a risk factor," said Min Joo Kang, senior economist at ING.

"Therefore, if trade tensions don't escalate more than the market currently expects, they won't affect the BOJ's rate hike plans."

In commodities, oil prices were broadly steady, poised for their strongest weekly performance since January.

Brent crude futures climbed 0.1%, to $72.06 a barrel, while U.S. West Texas Intermediate crude futures were down 0.15% at $67.97. Both were set for 2% gains for the week.

Gold eased 0.5% to $3,030 an ounce as investors booked profits after the yellow metal climbed to a record high in the previous session. Gold was on course for the third straight week of gains, supported by safe-haven demand.

(Editing by Kate Mayberry, Kim Coghill, William Maclean)