World equities were generally weaker on Thursday, adding to five sessions of losses, although Europe rebounded after recent hits over some of the region's more vulnerable economies.
Globally, investors have been closing books ahead of year-end in a climate of concern about the credit worthiness of various troubled economies.
Ratings agency Standard & Poor's on Wednesday warned that Spain risks a debt downgrade in two years if the government does not take tough action on its fiscal deficit.
Fitch Ratings has already downgraded Greece, while Moody's cut the ratings of six Dubai-linked issuers after concluding that no meaningful government support would be provided to top firms such as DP World.
The market will remain volatile until the end of the year, said Luc Van Hecka, chief economist at KBC Securities.
Most of the major long-term investors have already closed their books for the rest of the year. The market is really in the hands of traders, he said.
MSCI's all-country world stock index <.MIWD00000PUS> was flat to lower on the day, having lost more than three percent since hitting a new year high a week ago.
The pan-European FTSEurofirst 300 <.FTEU3> was up 0.7 percent.
The overall mood has lifted the dollar, which is up some 2 percent over the past week against a basket of currencies <.DXY>. It was slightly higher on Thursday.
The euro was down a little against the dollar. The Australian and New Zealand dollars jumped on expectations of higher interest rates.
Interest rates are becoming a more important factor and the market is looking more at fundamentals now, said You-Na Park, Commerzbank analyst in Frankfurt.
With the troubles in Greece and Spain there are a lot of difficulties in the euro zone, which is one reason why the euro is weak, she said.
The euro was trading at $1.4704, not far from November lows. Euro zone government bonds were flat.
(Additional reporting by Atul Prakash and Jessica Mortimer, editing by Mike Peacock)