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The market focus will now shift to U.S. factory orders data, and comments by Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren later in the session.

The market focus will now shift to U.S. factory orders data, and comments by Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren later in the session.

"Of the Fed officials due to speak today, focus will be on whether Mester turns dovish."

Mester had told Reuters in an interview early last month that she would prefer rates to be raised a little more quickly.

China's central bank in further injects funds 4 straight days in this week into the financial system open market operations to ease liquidity before the Lunar New Year holiday. Today, The People's Bank of China conducted 80 billion yuan of 14-day reverse repurchase agreements (repo) and 70 billion yuan of 28-day reverse repo, a process in which central banks purchase securities from banks with agreements to resell them in the future. The bank injects funds 360 billion yuan in total this week.

A senior researcher at China's central bank said China's economic growth would remain weak, and it may face increasing deflationary pressure.

Lu Lei, head of research at the People's Bank of China, said that China's economic stability could face rising risks from financial turbulence.

China's Ministry of Commerce (MOC) said on Thursday the country will actively participate in and push forward regional free trade arrangements that feature high-degree transparency, openness and inclusiveness.

An MOC statement said the ministry has noticed the signing of the the Trans-Pacific Partnership (TPP) and is weighing up this regional trade deal, which China has not signed.

"The TPP is an extensive agreement. China is studying it and evaluation work is under way," according to the MOC statement issued after representatives of 12 nations including the United States and Japan signed the TPP at a ceremony in New Zealand on Thursday.

"We hope the various free trade arrangements in the Asia-Pacific region will complement each other and jointly contribute to trade, investment and economic growth of this region," said the statement.

The Federal Reserve is likely to only increase interest rates three times this year, skipping a hike at its March meeting, Goldman Sachs said, revising its previous forecast for four hikes.

Goldman believes that the Fed may not hike until June although it noted that rates could still be lifted in April if market conditions improve significantly.

Activity seems to suggest modest expansion, Goldman said, but it noted that some data are signaling a slowdown early in the year.

It cited the ISM non-manufacturing index for January, which provides a reading on the services sector. The index fell to 53.5 in January, from 55.8 in December, below expectations of 55.1 from a Reuters poll. A reading above 50 indicates expansion.

That followed the ISM index for the manufacturing sector falling for a fourth straight month, with factory activity index rising to 48.2 from 48.0 in December.

"Risks are tilted to the downside—it is still easier to see the committee slowing down the rate of increases then speeding them up," Goldman said.

Crude oil futures extended gains from the previous session on Thursday as a weaker dollar and unconfirmed talk of producers potentially meeting to discuss output cuts lifted the market despite record U.S. stocks due to overproduction.

Despite the rise, analysts said prices would remain low in 2016 and 2017 as global demand slows and inventories swell.

U.S. crude futures were trading at $32.47 per barrel at 1507 ICT on Thursday, up 19 cents from the previous session's close when they rallied 8 percent from below $30 per barrel.

Six OPEC member states and two non members would be open to attending an extraordinary meeting if one is called, Venezuela’s oil ministry said after oil minister Eulogio Del Pino held talks in Iran on Wednesday.

Iraq, Algeria, Nigeria and Ecuador would join OPEC members Iran and Venezuela and non-OPEC producers Russia and Oman if talks are scheduled, the South American country’s oil ministry said in an e-mailed statement.

Morgan Stanley now sees oil mostly falling through 2016, compared with a previous outlook for prices to rise each quarter, analysts including Adam Longson said in a report Thursday. Brent crude is expected to average $29 a barrel in the three months to December, compared with an estimate for $59 in a Jan. 18 note.

“Weaker-than-expected demand, higher-than-expected supply, rising inventories and increased hedging incentives all work to delay rebalancing, and slow the rise in prices immediately thereafter,” Longson wrote in the Feb. 4 report.

National Australia Bank (NAB) said on Thursday that it expected "oil prices to recover mildly to $40 per barrel by end-2016 and $50 per barrel by end-17."

Reference: Reuters, CNBC, Bloomberg, Xinhua, The People’s Bank of China