Stocks and the euro fell on Wednesday after the US Federal Reserve dimmed hopes for fresh asset-buying, further underlining its divergence with an embattled Europe that remains in crisis-fighting mode.
Overnight minutes from the Fed's March meet showed less support for more quantitative easing (QE), or bond-buying, in the face of improved economic data, which buoyed the dollar and hit stocks in both the United States and Asia.
With Europe still battling its debt crisis and struggling with economic growth, the focus later will be on the European Central Bank's latest rate-setting meeting, with rates expected to remain on hold at 1%.
The Asian weakness extended into early European trade with the FTSEurofirst 300 down 0.1% and world stocks down 0.6% at 0701 GMT.
Emerging markets stocks, meanwhile, were 0.8% lower.
"Additional QE and/or extension of the current 'operation twist' programme have been a central focus for financial markets in recent months, but the overnight release of the latest (Fed) meeting minutes appeared to douse these expectations," Cameron Peacock, market analyst at IG Index said in a note.
"The result was predictable - an initial sharp sell-off in equities, a spike higher in the (dollar) and a corresponding slump in commodities and risk currencies. European markets were closed by the time the minutes were released and will have some losses to catch up with when they open."
Early moves in the euro were also weak as a result of the Fed action, with the single currency down 0.3% against the dollar and 0.4% versus the yen.
The greenback climbed 0.1% against a basket of currencies.
ECB Moves Eyed
The softening in US central bank support for fresh stimulus is unlikely to be mirrored by the ECB, which should maintain a supportive stance in the face of inflation concerns.
Bund futures sold off in early deals, down 0.4%, tracking overnight moves in US Treasuries in response to the Fed minutes, and attention will now shift to the ECB meeting and two fresh sales of peripheral euro zone debt.
Spain, in the bond-market spotlight as concerns around its finances and economic outlook grow, is set to see its borrowing costs jump at auctions of up to 3.5 billion euros in paper, while Portugal also comes to market to sell 18-month T-bills.
"It's going to be a struggle, especially for Spain," said a trader. "I don't see any compelling reason to buy Spain at the moment."
On Tuesday, Spain, which announced fresh budget cuts at a recent budget as it slides back into recession, said its debt level is on course to reach a 22-year high.
Among commodities, Brent crude oil, the European benchmark, was down at around $124 a barrel on the Fed comments, while gold was also slightly lower, at around $1,642.66 an ounce.
