Unease about higher oil prices and doubts about the implementation of Greece's latest rescue deal tempered risk appetite, supporting demand for safe-haven US government bonds.
A day after hitting a record high in euro terms, Brent crude jumped above $124 a barrel, raising worries that a run of sharp price gains could stymie the euro zone's growth prospects, making it harder for governments to meet budget targets and pull the currency bloc out of its debt crisis.
Brent has risen more than 11 percent this month, mainly on worries over Iranian supply, to reach a high of $124.28 on Friday.
European buyers of Iranian oil have cut back on purchases ahead of a European Union embargo on it effective July 1. Some of Iran's biggest customers in Asia including China have also reduced their buying from Iran.
"The recent resurgence in the price of crude oil has led to speculation that, in a repeat of what happened at this time last year, a spike in energy prices could undermine real economic growth just when the recovery appears to be gathering momentum again," said Paul Ashworth, chief US economist at Capital Economics in Toronto.
US stocks edged higher, with energy shares among top advancers.
The Standard & Poor's 500 index was not far from 1,370, considered the upper end of a technical barrier and a level not seen since June 2008, before the Lehman Brothers collapse and the ensuing financial crisis.
Over the past four sessions, the S&P has hovered around 1,360 and closed at a 9-month high on Thursday.
The Dow Jones Industrial Average was last up 14.41 points, or 0.11 percent, at 12,999.10. The Standard & Poor's 500 Index was up 3.58 points, or 0.26 percent, at 1,367.04. The Nasdaq Composite Index was up 7.40 points, or 0.25 percent, at 2,964.38.
"We've touched these significant points (in the stock indices) and they haven't shown a lot of support; that makes me want to look at the short term with a cautious eye," said Joseph Cangemi, managing director at BNY ConvergEx Group in New York.
Global stocks as measured by MSCI were up 0.6 percent, while the FTSEurofirst 300 index of top European shares was up 0.2 percent.
Energy shares were among those giving the biggest boost to markets, with Chevron up 0.8 percent at $109.22, giving the Dow its biggest boost. France's Total was up 0.8 percent at $56.55 in New York while Brazil's Petrobras gained 2.1 percent at $30.22.
In Europe, results from companies including Telecom Italia also reassured investors. Telecom Italia rose 6.8 percent after the company posted increased earnings, though it slashed its dividend to help reduce a debt pile of more than 30 billion euros.
Data on Friday confirmed Germany's economy shrank by 0.2 percent in the fourth quarter but investors were optimistic that Europe's biggest economy will avoid falling into recession after a strong business sentiment reading on Thursday.
The euro was last up 0.7 percent on the day at $1.3462, just off a peak of $1.3475, a fresh 2-1/2-month high.
The euro rose to a fresh 3-1/2-month high of 108.81 yen , far above this year's low of 97.04 yen hit on Jan. 16. It last traded at 108.72 yen, up 1.6 percent on the day.
The yen slumped to multi-month lows against the dollar and euro, hurt by reported selling by Japanese importers while the breaching of key technical levels exacerbated the move.
US Treasuries were on track for their best weekly performance in four weeks, although yields remain mired in the middle of a range that has held since early November.
Rising energy costs have raised worries about the potential for slower consumer demand, which has supported the safe-haven appeal of US government debt.
The benchmark 10-year US note was up 5/32, with the yield at 1.98 percent.
Brent crude was last up 7 cents at $123.69 per barrel.
