Asian shares mostly fell on Monday, with materials and technology stocks losing ground amid concerns about the impact on profits of a slowdown in the global economy.
Commodity-linked currencies such as the Australian dollar came under pressure again, after a hammering last week on worries of easing demand for resources from China, and the euro backed off a 3-week high ahead of a barrage of events this week, including an Italian bond auction and key German economic data.
European stocks were poised to make a better start after last week's falls, with Euro STOXX 50 index futures rising 0.3 percent and financial spreadbetters calling London's FTSE 100 <.FTSE> to open up 0.2-0.3 percent. <.EU>
Markets' ability to move much higher looks to be contained by the uncertainties surrounding the global economy and traders may have to endure a sideways market until next month's earnings season for a real catalyst either way, said Jonathan Sudaria, a dealer at Capital Spreads in London.
Commodity markets were mixed, with copper edging up but crude oil losing a little ground as supply worries diminished.
Asset returns in 2012: http://link.reuters.com/nyw85s
U.S. new home sales: http://link.reuters.com/qyj37s
MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> fell 0.6 percent, adding to a 1.6 percent loss last week. Tokyo's Nikkei share average <.N225> bucked the trend, eking out a 0.1 percent after losing more than 1 percent last week. <.T>
Equity markets had got off to a flying start in 2012, but have been wobbling since China lowered its growth forecast for the year to 7.5 percent in mid-March, with concerns exacerbated by weak factory data from China and Europe last week.
Wall Street shares edged up on Friday, led by a rebound in resource shares after Chile's Codelco
But the rebound failed to follow through into Asia, where the MSCI Asia ex-Japan's materials sub-index <.MIAPJMT00PUS> fell 1.2 percent, while tech stocks <.MIAPJIT00PUS> fell 0.8 percent.
This year's equity gains have been driven in part by steadily improving economic data from the United States, and massive injections of liquidity from major central banks.
Japanese stocks have led the way, rising more than 18 percent for the year so far.
What we're seeing now is a typical excess liquidity market, said Kenichi Hirano, operating officer at Tachibana Securities. The stocks that are gaining here, real estate, financials, iron and steel, these are all 'bubble' stocks that rise as a result of easy monetary policy.
The Australian dollar traded around $1.0440, down around 0.2 on the day, after falling well below $1.04 last week on concerns of slowing demand for Australia's resources from China, Australia's single biggest export market.
The yen fell broadly, after rallying on safe-haven demand last week.
The euro stood at $1.3250, easing from Friday's three-week high of $1.3293. Some market participants said it could come under pressure ahead of bond auctions in Spain and Italy on Tuesday.
Rome is looking to raise up to 7.5 billion euros ($9.95 billion) in debt markets amid renewed pressure on peripheral euro zone debt sparked by fears of fiscal slippage.
Any sign of erosion in restored confidence for these bonds is likely to weigh on the euro, Barclays Capital analysts wrote in a client note.
Germany's Ifo business sentiment survey was due for release later on Monday, while euro zone finance ministers will meet at the end of the week.
In commodity markets, copper rose 0.3 percent to around $8,420 a metric tonne (1.1023 tons) , while gold was virtually unchanged around $1,663 an ounce.
Brent crude oil slipped 0.2 percent to $124.89 a barrel and U.S. crude lost 0.3 percent to $106.58, as a possible resumption in crude production from South Sudan offset supply worries stemming from Western sanctions against Iran.
The geopolitical risk has been overly built into oil prices as we are in a low demand period where inventories are rising, said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp.
($1 = 0.7540 euros)
(Additional reporting by Mari Saito in Tokyo, Ian Chua in Sydney and Florence Tan in Singapore; Editing by Daniel Magnowski)