Signs the economic slowdown in Europe and Asia was gathering pace sent world share markets and oil lower on Wednesday, while the euro held steady against the dollar as traders await Spain's next move to solve its mounting debt problem.
The latest data from surveys of purchasing manager's activity across the euro zone and for China's services sector showed that growth has yet to stop sliding despite the best efforts of central banks to stimulate their economies.
"The data out of Asia is quite negative and that is going to put pressure on all riskier assets," said Ian Stannard, head of European FX Strategy at Morgan Stanley.
Investors want to see signs the liquidity boost from the central banks is taking hold before buying assets like equities and commodities, which should benefit the most.
The latest data, including weak export numbers from resource-rich Australia, sent Asian markets lower <.MIAPJ0000PUS> and saw the FTSE Eurofirst 300 index <.FTEU3> of top European shares slide 0.1 percent to 1,100.13 points.
MSCI's world equity index <.MIWD00000PUS> was down 0.16 percent at 332.97, though it remains in positive territory for October, which would be its fifth straight monthly rise.
Crude oil prices and commodities like copper were also hit by the weaker data which is expected to curtail demand.
Brent November crude futures fell 90 cents to $110.67 a barrel while U.S. November crude shed 54 cents to $91.35 a barrel.
Three-month copper on the London Metal Exchange had eased 0.85 percent to $8,255.00 a metric tonne, after climbing more than 2 percent over the past four sessions.
The fresh update from the September euro zone purchasing manager's survey showed it was almost inevitable now that the region slipped into its second recession in three years during the September quarter.
The Markit Euro zone Composite PMI fell to 46.1 in September from 46.3 in August. Any reading below 50 indicates economic contraction.
The survey found that order books shrank last month at the fastest pace in more than three years, while firms were cutting staff at the fastest pace since January 2010.
Last month the European Central Bank sought to calm market nerves and respond to the growing impact from the debt crisis on business by promising to buy bonds issued by governments that requested help if they agreed to tough economic reforms.
"The ECB's announcement of potentially unlimited bond purchases has calmed financial markets, but it has not turned around the economy yet," said Christian Schulz, senior economist at Berenberg Bank.
As yet no government has sought the ECB's help but the markets expect Spain, which faces huge refinancing needs this month, to be the first, although uncertainty over the timing of any request is keeping investors on edge.
Spanish Prime Minister Mariano Rajoy told regional government leaders on Tuesday that a request for ECB help was not imminent, dashing speculation that an announcement was in the works.
As such a move by Spain would spark big demand for the euro investors preferred to wait, leaving the single currency virtually unchanged against the dollar at $1.2920, just above the three-week low of $1.28035 hit on Monday.
"There's a little bit of doubt with respect to Spain but it's more or less inevitable they will request financial assistance at some stage," said Peter Kinsella, currency strategist at Commerzbank.
Rajoy's latest comments on the timing of any request for help also lifted demand for safe haven German government bonds sending 10-year yields 1.2 basis points lower to 1.45 percent.
Ten-year Spanish government bond yields were little changed at 5.76 percent while borrowing costs over two years were flat at 3.21 percent.
"A lot of the improvement we had seen in Spanish bonds yesterday was driven by overnight speculation that a bailout was imminent so any rebuttal of that had an impact," Brian Barry, fixed income analyst at Investec, said.
Activity in most markets was also being curtailed by caution ahead of the European Central Bank's monthly monetary policy meeting and a Spanish debt auction on Thursday, and by a U.S. jobs report due out on Friday.
"All eyes at the moment are on non-farm payrolls on Friday. If we get a reasonably good number that will be risk on across the board and euro will grind higher," Commerzbank's Kinsella said.
(Additional reporting by Ana Nicolaci da Costa and Nia Williams; Editing by Peter Graff)