By Riva Gold 
   -- Lira lurches lower 
 
   -- European bank shares fall 
 
   -- Shanghai Composite extends losses 

Global stocks came under pressure amid a drop in the Turkish lira and lingering worries about China's economy and trade relations.

The Stoxx Europe 600 edged down 0.3% midday, led lower by Italian and Spanish banks considered the most exposed to Turkey. Futures pointed to a 0.2% opening loss for the S&P 500 after a strong session Thursday.

Turkey's lira fell 7.4% Friday morning in what market participants described as illiquid trading conditions. The currency had been rebounding for most of the week after hitting a record low Monday, but concerns remain over the country's economic position, its domestic politics and its spat with the U.S.

The Trump administration warned that it is prepared to impose more penalties on Turkey if it doesn't release an American pastor facing 35 years in prison on disputed espionage charges.

Other emerging market currencies also came under pressure against the dollar Friday, with Russia's ruble down 1%, the Indonesian rupiah down 1.5% and the South African rand down 1.8%.

"Turkey is a potential domino," said Matthew Miskin, market strategist at John Hancock Investments. Other countries that rely heavily on external financing are the most susceptible to weaken if the dollar continues to strengthen, he said.

Earlier, Hong Kong's Hang Seng edged up 0.4% after five sessions of losses as index heavyweight Tencent Holdings rebounded from a large setback earlier this week.

The Shanghai Composite fell 1.3% however, ending the week down 4.5%. Concerns about China's technology sector, its currency, and trade relations between the U.S. and Beijing have also been key drivers of global markets in recent sessions.

While many previous geopolitical headlines such as tensions with North Korea have reflected buying opportunities, "with trade, we have to be a little more circumspect because we have the potential for a tit-for-tat race to the bottom that could have significant ramifications for earnings," said David Vickers, senior portfolio Manager at Russell Investments.

Signs of a modest breakthrough in U.S.-China trade relations helped markets recover Thursday after officials said they would hold lower-level talks later this month on the trade dispute.

Healthy earnings from companies like Walmart also helped many markets stabilize toward the end of the week, particularly in the U.S., money managers said.

"The corporate backdrop remains very strong in the U.S. and I don't see that changing," said Richard Saldanha, equity fund manager at Aviva Investors.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

August 17, 2018 07:03 ET (11:03 GMT)