Global markets have been rattled, with oil prices rising to their highest in a month after the killing of Pakistan's former Prime Minister Benazir Bhutto.
Benazir Bhutto was killed in a suicide attack in Rawalpindi
UK and Asian shares declined, while volatile trade dominated US bourses, which ended mixed.
An early oil rally prompted profit taking leaving a barrel of New York crude down 64 cents at $96 and London Brent crude falling 90 cents at $93.88.
The Karachi Stock Exchange will be shut for three days of mourning.
Ms Bhutto was assassinated on Thursday as she left an election rally, plunging the country into crisis.
Concerns about a less stable geopolitical environment unnerved markets, prompting a sell-off in shares in favour of assets considered safer, including precious metals.
An ounce of gold for February delivery added $10.90 to settle at $842.70 on the New York Mercantile Exchange after reaching a new 27-year peak at $843.50 earlier.
The US dollar fell against the Japanese yen, euro and Swiss franc as the plan to return Pakistan - a key US ally in the fight against terrorism - to a democracy looked fragile as violent protests erupt around the country.
"The sudden event has caught worldwide attention because Pakistan is not any other developing country. It is a nuclear-power country," Westcomb Securities said in a note.
"However, we view the current response to the event to be short-term," the note said.
Indian shares were pulled lower and then recovered briefly before closing down 9.77 points, or 0.05%, at 20,206.95 on fears that the assassination of Ms Bhutto could see foreigners withdraw funds from the region.
The Nikkei average ended down 1.7% or 256.91 points at 15,307.78 on the last trading session of 2007.
It fell 11% in 2007, its first loss in five years, making Tokyo the world's worst-performing major stock market.
Stock indexes in Australia, South Korea, Hong Kong and New Zealand fell by up to 1.7%.
The main index on the New York Stock Exchange eked out modest gains, up 0.05% at 13,365.9 after a government report showing a worse-than-expected fall in new home sales in the US raised fresh fears that the weakening housing market will yet drag down the US economy.
In London, the FTSE 100 index lost 23 points to 6,474.80, while Germany's Dax was up 0.36% and France's Cac dipped 0.18%.
There are concerns that the economy of Pakistan could be unsettled by the assassination, and that the problems may spread to other nations.
"It's not so much what happens in Pakistan. It's what happens in Afghanistan and everywhere else [in the region]," said Steve Rowles, an analyst with CFC Seymour securities in Hong Kong.