The euro took a brief battering on Wednesday on worries the European Union would not rescue fiscally struggling Greece while global stocks ticked over with investors eyeing major U.S. data due later in the week.
European Central Bank officials were due to arrive in Athens later in the day to discuss Greece's financial difficulties, but foreign exchange markets were stirred up by a media report quoting ECB executive board member Juergen Stark as saying Greece would not be bailed out.
He was reported as saying markets were deluding themselves if they thought member states would put their hands in their wallets to save Greece.
The euro fell sharply on the report, touching a low of $1.4285 against the dollar compared with its session high of $1.4371.
Starks' reported comments flew in the face of what EU leaders have suggested, however, and the currency recovered most of its poise to stand later at $1.4352.
The incident nonetheless underlined the fragility of market sentiment and worries about Europe's so-called peripherals -- those countries whose financial condition has been hit hardest by the global economic crisis.
The dollar, which has been weakening in the few days of trading so far this year, was up slightly against a basket of currencies <.DXY>.
Most investors are seeking confirmation that the world economy, and particularly the United States, is recovering in a sustainable manner.
As a result, much of the focus this week is on the monthly U.S. jobs data due on Friday.
The U.S. jobs data on Friday will be important, but the feedback you are getting shows that the trend is clearly improving, said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.
Expectations for the robustness of growth have improved significantly over the last few weeks, he said.
World stocks as measured by MSCI <.MIWD00000PUS> were flat, having risen more than 2 percent in the two previous trading session of the year and are sitting at around 15 month highs.
Emerging markets led the way, as they did for much of last year, with the relevant MSCI benchmark <.MSCIEF> up 0.4 percent. European shares put in tiny gains. The FTSEurofirst 300 <.FTEU3> was up less than 0.1 percent. It led higher by financials and miners.
Earlier, Japan's Nikkei closed up around 0.5 percent at a 15-month closing high. Euro zone government bonds were steady, with yields rising slightly.
(Additional reporting by Atul Prakash; editing by Chris Pizzey)