An improving economic outlook held world shares near a 20-month high on Friday, while the euro rose to its highest against the dollar since April in the wake of encouraging remarks from the head of the European Central Bank.
A massive stimulus plan in Japan also boosted optimism about future business activity, but nagging worries persisted about global demand and a possible drag from the debt ceiling fight in Washington, spurring selling in oil and basic metals.
As stocks and the euro gained appeal, investors trimmed back their safe-haven holdings of U.S. and German government debt.
"Equities are very overdue for a rest but that shouldn't make people throw in the towel in my opinion (as) they will continue to be supported by central banks' very accommodative policies," said Edward Page Croft, managing director at investment advisory firm Stockopedia.
While Japan aims to jumpstart its economy, U.S. and European central bankers have talked up the prospects for their economies in the past 24 hours.
Philadelphia Federal Reserve Charles Plosser repeated his outlook on Friday that the U.S. economy will likely grow about 3 percent in 2013, bringing the jobless rate down to 7 percent by year-end. Plosser's remarks followed mildly upbeat comments from St. Louis Fed chief James Bullard on Thursday.
Comments by ECB President Mario Draghi following the central bank's policy meeting on Thursday suggesting Europe's economy is set for a recovery in 2013 has raised bets that global growth might gather momentum this year.
The MSCI index of world shares was little changed at 349.33 points after rising earlier to 350.15, the highest level since May 2011.
On Wall Street, the three major stock indexes opened lower despite record earnings from Wells Fargo
The Dow Jones industrial average was down 24.03 points, or 0.18 percent, at 13,447.19. The S&P 500 was down 3.86 points, or 0.26 percent, at 1,468.26. The Nasdaq Composite Index was down 5.54 points, or 0.18 percent, at 3,116.22.
Europe's FTSEurofirst 300 index of top companies across the region also neared levels last seen in March 2011 shortly after the ECB decision and was consolidating those gains on Friday to be little changed at 1,163.62 points.
The yield on benchmark U.S. 10-year Treasury notes edged up to 1.91 percent, moving closer to an eight-month high near 1.98 percent set a week ago.
German Bund futures fell 42 basis points to 142.29 after touching their lowest level since late November.
In the currency market, the euro extended Thursday's rally against the dollar, rising 0.45 percent to $1.3327 after touching $1.3365 earlier, its highest since April.
The greenback however strengthened against the yen, rising 0.61 percent to 89.28 yen, a 2-1/2 year high, after the Japanese government agreed a $117 billion spending boost for the economy, and new Prime Minister Shinzo Abe stepped up pressure on the Bank of Japan to ease monetary policy more aggressively.
The BOJ is likely to adopt a 2 percent inflation target at its January 21-22 meeting, double the current goal, and will consider more purchases of government debt to achieve the target, sources told Reuters this week.
In the commodity markets, oil prices were slipping as traders adjusted to the current lacklustre growth in the global economy, which has prompted the world's biggest producer, Saudi Arabia, to cut back supplies.
Data on Friday showing that China's annual consumer inflation had accelerated to a seven-month high of 2.5 percent in December also dampened demand as it reduced the likelihood of the central bank easing monetary policy to boost activity.
Brent crude futures fell $1.60 or 1.4 percent a barrel to $110.28 while U.S. oil future shed 56 cents or 0.6 percent at $93.26.
Gold prices fell 0.82 percent at $1,660.94 an ounce as the firmer tone to the dollar prompted some buyers to cash in gains after the metal's biggest one-day rise this year.
