Investor hopes for a bigger bailout fund for euro zone debtors gave way to worries about the details Wednesday, sending European shares lower and ending a three-session rally.
Equity markets have rallied over the past few sessions on expectations that European officials will aggressively tackle the debt crisis in its peripheral economies, notably Greece, by boosting the euro zone's 440 billion euro rescue fund.
But the plans face opposition in Germany and there are signs of a split within the currency bloc over the terms of Greece's next bailout.
European Commission President Jose Manuel Barroso, however, indicated Greek banks could receive more help.
The uncertainty was enough to take the air out of the tentative global stock rally.
World stocks as measured by MSCI were down 0.1 percent. The pan-European FTSEurofirst 300 was volatile, opening sharply lower but later trading around 0.6 percent down.
The European index has lost close to 17 percent this year.
Japan's Nikkei earlier closed flat.
The market has obviously got enthusiastic about discussions about the European Financial Stability Fund, said Andrea Williams, fund manager at Royal London Asset Management.
But we are a long way from it being concluded.
International auditors were heading for Athens to continue discussions on the next tranche of agreed aid, while Germany suggested a new bailout may be renegotiated.
The euro rose 0.2 percent to $1.3620, paring some of the previous day's gains when it rose to a high of $1.3668.
It has lost around 5.5 percent so far this month but is off an eight-month low of $1.3361 hit on Monday.
We saw a late reversal of some of last night's big 'risk on' moves on reports that European leaders were not completely united on the planned policy response, ANZ said in a note.
The dollar was slightly higher against a basket of major currencies.
Core euro zone debt was flat.
Demand for German government bonds in a five-year sale was weak, although they were sold at a yield of just 1.22 percent compared with 2.16 percent in the previous auction.
(Reporting by Jeremy Gaunt; editing by Anna Willard)