Emerging market and Japanese shares fell sharply on Tuesday after an overnight sell off on wall street, but the retreat failed to boost the battered dolloar.
Investors are becoming jittery about both the extent of this year's global equity rally -- stocks have risen as much as 75 per cent from a March low -- and over the knowledge that authorities will eventually withdraw stimulus measures that have been a key factor in driving a global recovery.
The Wall Street sell off on Monday, for example, was prompted by fears that US lawmakers may let a federal home buyer tax credit expire.
This sentiment swept over into Tuesday trading with MSCI's all-country world stocks index down 0.4 per cent, its emerging market sub-index down 1.2 per cent and Japan's Nikkei closing down 1.45 per cent.
Europe was different, partly as a result of oil heavyweight BP's third-quarter results beating forecasts.
The pan-European FTSEurofirst 300 index of top shares was up 0.3 per cent.
WEAKER DOLLAR The dollar weakened against a basket of major currencies despite the fall in stocks, which in recent months has tended to boost the currency.
It was partly a reaction to sharp gains on Monday, when the the euro had its steepest drop since early August, falling nearly 1 percent, and the dollar index posted its best daily gain since September.
The dollar index, a measure of the greenback's performance against six other major currencies, fell 0.2 per cent to 75.918, but above a 14-month low of 74.94 set last week.
The euro gained 0.1 percent to $1.4887 and the dollar fell 0.3 per cent to 91.95 yen.
Demand for euro zone government bonds rose with the two-year yield falling 5 basis points to 1.351 per cent.
There are major supply announcements in both the United States and Europe later in the day.
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