The euro steadied near a two-year low and European shares fell on Thursday as concern over the global growth outlook sapped investor appetite for risk assets.
Their enthusiasm was already hit by a lack of clear clues on possible U.S. stimulus measures.
A surprise rate cut in South Korea, a 50-basis point cut in Brazil to a record low and a lack of any clear policy action by the Bank of Japan added to the cautious mood.
These developments have favoured the dollar and safe-haven assets.
"There is not much to expect from economic data and earnings.
``The markets hope rest on more quantitative easing and more stimulus from Europe - more stimulus from everywhere," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.
The dollar measured against a basket of key currencies, rose to a two-year high of 83.61 in overnight trade before settling around 83.49 in early European activity, pushing the euro to near a two-year low of 1.2234 dollars.
The currency had gained after the minutes of last month's Federal Reserve meeting, published on Wednesday, showed the U.S. economy would have to weaken further before its central bank took any more easing steps.
However, the minutes showed some officials favoured more stimulus.
A weak session in Asian share markets on Thursday left the MSCI world equity index lower for its seventh straight session, down 0.4 per cent at 306.91 points.
The FTSE Eurofirst 300 index of top European shares weakened 0.8 per cent to 1,031.11 in early trade, having closed flat on Wednesday.
In debt markets, investors were watching the sale by Italy of 7.5 billion euros of 12-month bills, which precedes a 5.25-billion euro longer-term bond sale on Friday.
Yields on Italian and Spanish debt are expected to gradually ease. (Reuters/NAN)