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Concerns about the US Federal Reserve's tapering its bond-buying programme and the Bank of Japan's commitment to its monetary stimulus sparked a broad sell-off of stocks, bonds and commodities on Tuesday.
The dollar, which chalked up its biggest one-day fall against the yen since May 2010 in the selloff, recovered on Wednesday by about 0.5 percent to trade around 96.50 yen.
The euro fell 0.25 percent against the dollar. European Central Bank Executive Board member Peter Praet said on Tuesday the ECB had room to cut interest rates further
European shares led the gradual recovery in global equity markets after another volatile session in Asia saw MSCI's broadest index of Asia-Pacific shares outside Japan drop 0.4 percent to a six-and-a-half-month low.
The selloff was seen drawing some buyers back into the markets, and with US data providing only tentative signs of a recovery, currency strategists said it was increasingly unlikely that Fed stimulus would soon be cut back.
"U.S. data has not been supportive for an early reduction," said Niels Christensen, FX strategist at Nordea.
A fund manager said recent market volatility was not linked to any fundamental change in the global economic outlook or a shift in central banks' accommodative policies.
"The back-up (price falls) you have seen over the last month is actually a bit of a positive." David Zahn, head of European fixed income for Franklin Templeton said.
"It has wiped out quite of lot of the people who had a short-term view and reflects a little bit more the fundamentals."
STOCKS EDGE UP
The pan-European FTSEurofirst 300 index gained 0.45 after having fallen to six-week lows in Tuesday's selloff. .
Japan's Nikkei stock average earlier extended its losses to close 0.2 percent though it was off its day's lows. The Nikkei has now fallen some 17 percent from a five-and-a-half-year high scaled last month when worries began to Bank of Japan's commitment to tackle rising bond yields which threatened its stimulus plans.
Further signs that Britain's economy was strengthening underpinned the UK stocks and gave a lift to sterling which rose to a three-week high against the euro and edged towards a four-month peak against the dollar.
The UK reported that the number of Britons claiming unemployment benefit fell more than expected in May to its lowest level in two years.
"In terms of the implications for the economy, it's encouraging in the sense that the increase in employment will continue to support the income background and therefore encourage higher consumer spending," Philip Shaw, chief economist at Investec said.
In the debt market, US Treasuries and German bond futures were weak, but the recent jump in yields was also seen luring some buyers back into the market.
Ten-year notes slipped 3/32 in price to yield roughly 2.2 percent to be just below a 14-month high hit on Tuesday.
The German Bund future was about 5 ticks down at 142.69 with German 10-year yields half a basis point up at 1.56 percent.
