World stocks steadied just off this week's 10-month high on Wednesday while a closely-watched German survey, showing a bigger-than-expected improvement in business morale, gave the euro a brief shot in the arm.
The Ifo business climate index rose for a fifth month running to 90.5 in August, compared with an estimate for a rise to 88.9 and an upwardly revised 87.4 in July.
The euro quickly erased its gains and government bonds advanced however, reflecting just how cautious investors are following a sharp rally in risky assets in recent weeks.
As each day passes, the thought that this rally is unsustainable becomes less and less valid. Whilst it is inevitable that we will have negative days along the way, more and more investors are buying in to the idea that this is not a blip, said Brian Myers, analyst at ODL Securities.
Confidence is a fragile beast, but at the moment we should all be enjoying this return to bullishness. MSCI world equity index <.MIWD00000PUS> was flat after hitting a 10-month high on Tuesday. The index has risen more than 21 percent since January.
The FTSEurofirst 300 index <.FTEU3> lost 0.1 percent with chemical, oil and gas companies leading the way down.
The (Ifo) figures are good. It confirms Germany is out of recession and things are turning up, a European trader said. But the market is tired, pausing for breath and taking profit.
The euro rose to the day's high of $1.4349 before slipping to $1.4325 while it briefly hit a 2-1/2 month high of 87.83 pence against the pound.
The dollar <.DXY> lost 0.1 percent against a basket of major currencies.
Emerging stocks <.MSCIEF> fell 0.3 percent.
Chinese stocks <.SSEC> rose 1.8 percent after better-than-expected earnings from key companies. However, the index has lost around 13 percent so far in August, on track for its biggest monthly decline in October.
U.S. crude oil rose 0.7 percent to $72.52 a barrel.
The September Bund future gained 10 ticks.
(Additional reporting by Atul Prakash and Dominic Lau, editing by Mike Peacock)