Overnight, Zions sank 13% after disclosing it would take a $50 million loss in the third quarter on two loans from its California division. Western Alliance's stock slumped 11% after it initiated a lawsuit alleging fraud by Cantor Group V, LLC. "While the recent issues of the two lenders seems well contained, where there is smoke there is often fire and the remedy of the 2023 crisis has created a tinderbox for another banking flare-up," said Tony Sycamore, analyst at IG. The two developments pummeled US banking stocks and weighed on the US dollar to the benefit of the yen and the Swiss franc. Two-year Treasury yields hit a fresh three-year trough of 3.4040% on Friday as investors priced in at least two more quarter-point rate cuts from the Federal Reserve this year. The flight to safety saw gold hit a record of $4,378 per ounce, although it ran into some profit-taking and was last flat. Even so, the bullion is set for a weekly gain of 7.6%, its biggest since early 2020. Silver also hit a new peak. Both S&P 500 futures and Nasdaq futures lost 0.3% ahead of more earnings from the US regional banks later in the day. European stock futures fell 0.7%, while FTSE futures dropped 0.9%. Sentiment in equities has also taken a hit due to rising trade tensions between China and the United States. China on Thursday accused the US of stoking panic over its rare earth controls, rejecting a White House call to roll back the curbs.   MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.9%, taking the week to negative territory. Japan's Nikkei lost 1% as its banking index tumbled. Taiwan's shares fell 0.9% even after chipmaker TSMC posted a record quarterly profit and issued a rosy forecast for spending on artificial intelligence. Both Chinese blue chips and Hong Kong's Hang Seng tumbled 1.4%. The credit worries and rate cut bets undermined the US dollar, which was on track for a weekly loss of 0.6% against its major peers to 98.24, the lowest in ten days. The yen and the Swiss franc gained most, up 0.7% and 0.9% for the week. Bank of Japan Governor Kazuo Ueda said that the central bank would scrutinise various data in deciding whether or not to raise interest rates this month. Liberal Democratic Party (LDP) leader Sanae Takaichi is still wooing allies to help clinch a prime ministerial vote expected next week. Treasuries are set for a third straight week of gains. Two-year Treasury yields slipped 2 basis points on Friday to 3.4040%, a fresh three-year low, and were headed for a third straight week of declines. Ten-year Treasury yields also eased 2 bps to 3.959% and were down 10 bps for the week. Oil prices extended losses, after falling 1% overnight as the US President Donald Trump said he and Russian President Vladimir Putin agreed to meet in Hungary soon to discuss ending the war in Ukraine. US crude fell 0.7% to $57.04 a barrel, while Brent was also off 0.7% to $60.63.