The euro, commodities and Asian shares fell on Monday, weighed down by uncertainty about Spain's bailout and concerns over a slowdown in demand that was underscored by sluggish business activity data in Japan and China.
Trade was subdued, with several Asian markets closed for holidays, including China, Hong Kong and South Korea,
"Investors are focusing on demand indicators being weaker than expected," said Natalie Rampono, a commodity strategist with ANZ in Melbourne.
A 0.4 percent drop in U.S. stock futures hinted at a weak start on Wall Street, while financial spreadbetters expect London's FTSE 100 <.FTSE>, Paris's CAC-40 <.FCHI> and Frankfurt's DAX <.GDAXI> to open down as much as 0.3 percent. <.L> <.EU> <.N>
The MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> fell 0.3 percent. The Australian market <.AXJO> was caught in choppy trade, rising as much as 0.6 percent before ending flat. Taiwan stocks slid 0.6 percent <.TWII> after rising 5.7 percent in the third quarter.
Japan's Nikkei stock average <.N225> fell 0.8 percent to a three-week low as local profit warnings underlined growth fears. <.T>
China's official factory purchasing managers' index, which tracks mainly big firms, inched up in September to 49.8 from 49.2 in August, reflecting the struggle by the world's second-biggest economy to regain strength.
HSBC's China PMI earlier showed overall factory activity shrank for an 11th consecutive month in September, suggesting the economy has almost certainly suffered a seventh straight quarter of slowing growth.
Beijing approved about $150 billion worth of infrastructure projects last month and has kept money markets liquid, but has refrained from cutting interest rates or the amount of reserves banks must hold since July.
In Japan, sluggish economic growth and the euro-zone's debt crisis hit sentiment among big manufacturers, which worsened in the third quarter, Bank of Japan data showed. South Korean exports to Europe fell 5.1 percent from a year earlier while Indonesia, Southeast Asia's biggest economy, said exports in August tumbled 24.3 percent from a year earlier.
The HSBC Taiwan PMI for September fell at its fastest rate in 10 months as export orders slumped.
Euro zone and U.S. manufacturing surveys are due later on Monday but the key statistic this week is Friday's U.S. nonfarm payrolls, the first jobs data after the Fed's latest easing.
DOLLAR DRIVES COMMODITIES LOWER
U.S. crude fell 0.7 percent to $91.57 a barrel and Brent fell 0.7 percent to $111.61.
The euro fell 0.4 percent to a three week low of $1.28035 while risk-sensitive currencies also fell, with the Australian dollar slipping 0.3 percent to $1.0340.
The safe-haven dollar was bid, lifting the dollar index <.DXY>, measured against a basket of key currencies, up 0.1 percent, weighing on spot gold which traded down 0.2 percent to $1,766.41 an ounce.
Gold is typically associated with safety but it is also perceived as an alternative currency and comes under pressure when the U.S. currency strengthens.
While copper and steel may bear the brunt of worries about growth in China, the world's leading consumer of base metals, oil and gold were likely to be underpinned over the long term by the recent round of monetary stimulus packages launched by the U.S. Federal Reserve, said Bob Takai, general manager of Sumitomo Corp's energy division.
"U.S. oil prices are weighed by lackluster U.S. economic fundamentals and authorities probably don't want to see a spike in oil which puts a drag on the economy. But oil is also unlikely to slump thanks to ample liquidity provided by the Fed's quantitative easing," he said.
London copper fell 0.3 percent to $8,184 a metric ton.
EYES ON EUROPE
An independent audit on Friday showed Spanish banks will need a total of 59.3 billion euros ($76.3 billion) in extra capital to beef up their strength.
Credit rating agency Moody's said in a research note dated October 1 that the "recapitalization will materially enhance the solvency of affected institutions and help restore market confidence in Spain's banking system as a whole."
But uncertainty over when and whether Spain will seek external aid has kept investors nervous.
Greece, another source of market jitters, resumes talks with its international lenders this week for a bailout. Two German magazines reported on Saturday Athens will receive the aid despite budget shortfalls and slow progress on reforms because the euro zone does not want the country to leave the euro.
"All of this suggests a range trading environment with a mild positive bias," Sebastien Galy, currency strategist at Societe Generale, said in a note.
A slew of central bank policy meetings this week will kick off with the Reserve Bank of Australia on Tuesday, followed by the ECB, the Bank of England and the BOJ, potentially deterring investors from making big bets. ($1 = 0.7773 euros)
(Additional reporting by Ramya Venugopal in Singapore; Editing by Muralikumar Anantharaman and Richard Pullin)