Commodity prices fell for a second day in a row on Wednesday, hurt by profit-taking and a stronger dollar and putting pressure on world equity markets.
Oil, which had only a few days ago looked to be heading to $100 a barrel again, hovered below $89 a barrel.
A number of market moves were put down to investors adjusting positions following end-of-year balancing of portfolios. Prices of both commodities and equities remained around at multi-year highs.
Investors were also eyeing U.S. jobs data due on Friday for confirmation that the world's largest economy is recovering, a key factor in recent equity rallies.
There is some optimism with regards to the U.S. economy, but that is mixed with concerns over where Europe is going in the short- to medium-term. We are likely to remain very data sensitive, said Keith Bowman, equity analyst at Hargreaves Lansdown.
World stocks as measured by MSCI <.MIWD00000PUS> were down 0.4 percent, but still within a few points of highs last seen in the third quarter of 2008.
Europe's FTSEurofirst 300 <.FTEU3> was down 0.7 percent. Earlier, Japan's Nikkei <.N225> closed down nearly 0.2 percent after hitting a 7-1/2 month closing high on Tuesday.
Stocks related to commodities were helping pull the bourses off their highs.
Commodities were hit hard on Tuesday, with the Reuters-Jefferies CRB index <.CRB> closing nearly 1.6 percent down as energy, metals and agricultural investors took profits on the heady gains made on thin holiday volume over the past two weeks.
The sell-off continued in some areas on Wednesday. Copper futures, for example, fell nearly 1 percent in London.
The dollar took some of the blame for the commodities' slide, holding firm on hopes for U.S. economic recovery.
Market players said the dollar's rise and the partly related drop in commodities this week have been riven by position unwinding.
The move over the past two weeks was somewhat exaggerated, having taken place in thin liquidity. With liquidity now coming back on stream, the markets are now reassessing some of the moves, said Sue Trinh, strategist at RBC Capital Markets.
The dollar index, which measures the greenback's value against major currencies, edged up 0.1 percent to 79.539 <.DXY>.
The euro dipped 0.2 percent to $1.3270, with traders reporting good interest from central banks to pick up the single currency on dips.
Yields fell on core euro zone bonds as demand grew for safer assets.
(Additional reporting by Atul Prakash and Neal Armstrong, editing by Mike Peacock)