Global equities slipped on Wednesday with Japan leading the falls on concerns over the pace of recovery, while crude oil prices recovered and the euro picked up from a one-month low on bargain hunting.
Worries over Dubai's debt problems dampened risk appetite, though the stock sell-off was limited outside the Gulf after sharp losses in European and U.S. equities in the previous session. Safe-haven government bonds were steady.
Dubai's benchmark fell 6.2 percent, hitting a more than eight-month low and leading emerging market shares weaker.
The MSCI emerging equities index lost 0.7 percent and the MSCI All-Country World Index eased 0.3 percent, with Japan's Nikkei average down 1.3 percent after a bigger-than-expected downward revision to Japanese economic growth in the third quarter.
In Europe, the FTSEurofirst 300 index was down 0.4 percent, falling for the third day in a row, and Greek bank shares extended recent losses, down 3.1 percent after Fitch Ratings on Tuesday downgraded the country's sovereign rating on fiscal deterioration.
There is no real reason for anyone to go back into the market. The year-end wind down and the flattening of traders' books started a week or so ago, said Jim Wood-Smith, head of research at Williams de Broe.
Greece's downgrade along with Dubai's debt crisis had weighed on the euro, but the currency recovered from a one-month low on Wednesday.
The euro was up 0.2 percent at $1.4735 after a three-day of decline against the dollar.
While there is always the risk of another heavily-indebted country being downgraded this year, such as Spain, Ireland or Portugal, it looks like the euro will now stabilize at around $1.4700, said Stuart Bennett, senior fx strategist at Calyon in London.
The U.S. currency also fell 0.8 percent to 87.67 yen.
Worries about Britain's fiscal health continued to pressure sterling, which dipped below the $1.62 mark for the first time since mid-October ahead of finance minister Alistair Darling's pre-budget report at 1230 GMT (7:30 a.m. EST).
Oil prices recovered to above $73 a barrel, supported by industry data showing a big drop in U.S. crude stocks and a Saudi Arabian assurance over the strength of Gulf economies.
Gold edged off three-week lows as the dollar failed to retain gains.
Yields on benchmark 10-year U.S. Treasuries were steady at 3.390 percent, while those on 10-year Bund were down 2 basis points at 3.140 percent. (Additional reporting by Joanne Frearson and Naomi Tajitsu in London, editing by Mike Peacock)