Asian stocks suffered a second session of sharp losses on Thursday, while the dollar struggled to make much headway after the U.S. central bank chief signaled the recovery in the world's biggest economy was still fragile.
European stocks, however, were expected to open slightly higher, according to financial bookmakers.
Worries about further interest rate hikes in China and whether authorities in emerging Asia can tackle inflation without derailing longer-term growth have prompted investors to lock in profits on some of last year's best performing markets.
Japan's Nikkei <.N225> slipped 0.1 percent, while shares elsewhere in Asia <.MIAPJ0000PUS> slid 1.3 percent, wiping out this year's gains to reach lows not seen since late December.
Hong Kong's Hang Seng index <.HSI> fell 0.7 percent, South Korea's KOSPI <.KS11> lost 1.8 percent and Singapore's Straits Times Index <.FTSTI> shed 1.2 percent.
Last year's laggards like the Nikkei, however, remained well in the black for the year as investors rotated into some developed markets from emerging ones.
It's not like buying in Japanese stocks has completely stopped, but investors have been looking for a reason to take profits and now they're cautious about overheating in the market, said Norikazu Kitta, strategist at Nikko Cordial Securities.
Despite the generally downbeat mood, there were patchy bright spots in the market. Among them, shares in Australian bourse operator ASX
Investors are hoping that merger news between major bourses like the NYSE Euronext and Deutsche Boerse would boost prospects for Singapore Exchange's $7.9 billion takeover bid for ASX, which is facing political hurdles in Australia.
Investors, however, pushed SingTel shares
Meanwhile, the dollar index <.DXY>, which tracks the greenback's performance against a basket of major currencies, edged up 0.2 percent to 77.786 after a steep decline overnight.
Many traders still think the dollar is in a holding pattern for the near term as the euro was also lacking upward momentum of its own after the European Central Bank last week quelled expectations of an early rate hike.
The euro traded at $1.3690, retreating from a one-week high around $1.3744 set a day earlier.
It's difficult for now for the euro to rise above the peak hit earlier this month. It will need a fresh factor to go beyond that peak, said Keiji Matsumoto, a strategist at Nikko Cordial Securities.
Also under pressure, the Australian dollar hit one-week lows at $1.0074 even after another solid jobs report as investors bet the numbers were not strong enough to make a rate rise more likely anytime soon.
U.S. crude futures drifted up 0.2 percent to $86.87 a barrel, and Brent crude rose above $102, supported by ongoing tension in Egypt and tighter North Sea supplies.
Gold edged down to $1,361.30 an ounce, well off a lifetime high around $1,430 hit in December, while copper, which hit an all-time high of $10,160 per tonne on Monday, traded at $9,970.
(Additional reporting by Ayai Tomisawa and Hideyuki Sano in Tokyo; Editing by Andrew Marshall & Kim Coghill)