Concern about plans for a fundamental review of the bailouts given to Europe's high debtors hit European stocks on Monday and drove up the bond yields of troubled euro zone economies.
Wall Street, however, looked set to open with gains.
The euro itself rebounded from recent sharp losses. Commodity prices firmed, bouncing back from their biggest weekly drop since 2008 as the dollar eased back.
The focus in Europe was on the implications of Friday's unusual and secretive meeting of selected financial officials who discussed the need for new adjustments to Greece's aid program.
It was not clear to what extent such a move would also trigger adjustments to similar repayment plans for Ireland and Portugal. An Irish minister said any concession to Athens should mean better terms for Dublin as well.
Rumors about a full-on restructuring of Greek debt have roiled European markets for several weeks now.
Yields on Greek and Portuguese debt rose, with five-year Greek paper offering around 22 percent.
The cost of insuring Greek, Irish and Portuguese debt against default also rose, with investors increasingly concerned that Greece may have to dilute its repayment terms for private bondholders.
By contrast, yields on core euro zone bonds fell as investors bought into their relative safety.
Traders said the market was reacting to "a lot of noise" -- suggesting that investors wanted clarity on what was happening in the euro zone.
Amid the uncertainty, the FTSEurofirst 300 stock index fell half a percent, with banks, seen as exposed through Greek bond holdings, taking a hit.
"Investors should remain cautious about assets in the euro zone peripheries due to increased uncertainties and should switch into the core," said Andy Lynch, who manages 2.5 billion euros for Schroders.
The MSCI all-country world stock index was down about a third of a percent, also hurt by a two-thirds of a percent loss in Japan.
Euro rebounds
The euro recovered a bit from last week's steep drop, which was brought on both by an apparent delay in the European Central Bank's next rate rise move and by dollar-boosting U.S. jobs data, which came in stronger than expected on Friday.
The rebound in various commodity prices after their rout last week also helped to pull up the euro from a three-week low.
"The bounce has seen the euro rise past $1.44, but the market is a bit cautious given the overextended position in currencies," said Paul Mackel, director of currency strategy at HSBC.
The euro was up 0.6 percent at around $1.44, after a 3.3 percent fall in the past two sessions took it to a three-week low around $1.4310.
The dollar was down a third of a percent against a basket of major currencies.
This, along with the better U.S. economic data, helped demand for commodities, which are priced in dollars.
Brent crude futures rose more than $3.50 to $112.82 a barrel as the dollar weakened and some traders and investors went bargain hunting after last week's sell-off.
Spot gold rose 0.8 percent, following its biggest weekly loss since the first quarter of 2009. Silver, copper and wheat also rose.
REUTERS
