European stock index futures fell and the euro dipped Wednesday as investors sought more signs that Europe was tackling the debt crisis before committing bolder market bets.
Asian shares mostly lost ground and oil and metals fell, with copper down more than 4 percent, as a rebound in riskier assets ran out of steam.
The dollar rose as money managers sought safety in the U.S. currency amid signs that a deal on beefing up the euro zone's rescue fund still faced major hurdles.
Investors think, isn't the European situation better? But we have no way of knowing for sure at this point, and until they're more confident, we probably won't see major buying, said Hiroichi Nishi, equity division manager at SMBC Nikko Securities Inc in Tokyo.
Plans to increase the financial firepower of the euro zone's 440 billion euro rescue fund face opposition in Germany, while a Financial Times report said that a split had opened up within the currency bloc over the terms of Greece's next bailout.
Euro STOXX 50 index futures fell 1.3 percent, pointing to a halt in the rally that drove the euro zone blue chip index up 13.5 percent since a 2-1/2-year low on Friday. Futures for Germany's DAX and France's CAC-40 also fell more than 1 percent, while financial spreadbetters called the FTSE 100 to open around 1.4 percent lower.
In Asia, Japan's Nikkei crawled 0.1 percent higher, while MSCI's broadest index of Asia Pacific shares outside Japan was little changed on the day.
U.S. stocks rose a little more than 1 percent on Tuesday, with a sharp pullback late in the session from stronger gains underlining the fragility of sentiment. S&P 500 futures traded in Asia were flat.
Turbulence on global markets since late July has been driven by investors' twin fears of renewed recession in the United States and the chaos that Europe's sovereign debt crisis could inflict on the financial system if it continues unchecked.
Expectations have risen among market economists that Greece will be forced soon to default on its massive debts, with uncertain consequences for both the exposed European banking sector and other struggling euro zone nations.
There is also concern that, while Europe's rescue vehicle has been able to cope with bailing out Greece, Portugal and Ireland, its resources would be overwhelmed if a bigger nation such as Italy or Spain were to need help.
EURO ZONE RATE CUT
The euro eased 0.1 percent to around $1.3562, having climbed as far as $1.3665 on Tuesday amid reports that euro zone policymakers were looking at ways of leveraging the rescue fund to boost its available funds.
The single currency has still lost 5.5 percent so far this month but is off an eight-month low of $1.3360 hit on Monday.
Unless you can predict which euro zone policy maker will say what and when, it's too scary to trade the euro, said a trader for a Japanese bank in Tokyo.
Currency strategists at RBS lowered their forecast for the euro through to the end of 2012, citing expectations of an interest rate cut by the European Central Bank next month that would narrow the single currency's yield advantage.
The yen rose as Japanese exporters sold dollars and euros ahead of the quarter-end and Japan's financial half-year. Traders also cited euro selling by Japanese investors repatriating proceeds gained from coupon payments on their foreign bond holdings.
The euro fell 0.4 percent against the yen to around 103.83, while the Japanese currency gained 0.3 percent against the dollar to about 76.56.
The dollar, which along with U.S. Treasuries has supplanted gold in recent weeks as the asset of choice for safe haven seekers, rose 0.5 percent against a basket of currencies
The firmer dollar hit commodities priced in the U.S. currency, with U.S. crude oil futures falling 1.8 percent to $82.93 a barrel and Brent crude dipping 0.8 percent to $106.32.
Copper slid more than 4 percent to $7,250 a tonne, while gold fell 0.5 percent to around $1,640 an ounce.
Currently, gold has positive correlation with commodities and a negative correlation with the dollar, said Ong Yi Ling, an analyst at Phillip Futures in Singapore.
Credit market players in Asia said a modest improvement in sentiment could open up a window of opportunity for top-rated borrowers in the dollar borrowing market, effectively shut in recent months of fears of a credit squeeze, ahead of the quarter-end.
We could see the primary market window opening but it has to be a certain type of issuer, it won't be open for everyone, said a Hong Kong based trader with a European bank referring to the resumption in debt offerings after drought-like conditions in the third quarter
Financials will find it tough, a sovereign type of name or a frequent issuer like Hutch (Hutchison Whampoa) will be more accepted.
Japanese government bonds, which have been boosted in recent weeks by their safe-haven appeal, were flat, with some investors taking profits after the benchmark 10-year yield -- steady on the day at 1 percent -- fell as low as 0.965 last week.
Investors say they have never had a good time buying 10-year bonds below 1 percent, said Koji Ochiai, chief market economist at Mizuho Investors Securities.